Franchised or Non-Franchised Business Ownership

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There is not a definite set of statements to determine whether a franchised or a non-franchised business is the right choice for you.  I have found, however, that individuals who leave corporate jobs after many years of working there fit very comfortably into franchises. They tend to be most comfortable in very structured businesses, knowing things will be done a certain way and in a certain order.  There are many individuals, not just those leaving corporate jobs, who also fit into this category.

Buying a business is a very personal thing.  As you are searching for a business, you may find some that are franchises.  You can also purchase a franchise and start a new franchised business.  If you start a new franchised business, it is a much safer option than starting a business from scratch that is not a franchise, as the franchisor will see that everything is done correctly, making sure it meets all the requirements for that franchise.  If you are thinking of starting a business, there is less risk and many benefits if you buy a start-up franchise.  The franchisor does the research to find the demographics and perfect location for the franchise.  A plan is in place for you to follow, and you have the benefit of the franchisor’s advice and expertise. You also have brand recognition and help developing your customer base.  

When buying a franchise, you will own a business with resources of a proven franchise.  Included in the asking price will be the franchise fee, which will be listed as an asset of the business.  You will be buying a protected territory, which means the franchisor will not allow another franchisee to sell in your area.  You must follow the franchisor’s policies, which may include uniforms, packaging, and marketing materials.  A non-franchised business will likely have these in place, also.  The difference is the franchised business must continue with certain things, and you may not make changes without franchisor approval.  You will also be required to redecorate periodically.  This is not a bad thing, as your business stays fresh and up to date.  Another advantage is that you are part of a large group and not just your single business, so you take advantage of purchasing your supplies cheaper because of bulk buying by the franchisor.  Remember, whether you are buying a franchised business or a non-franchised business, each will have financials and adjusted cash flows with all income, expenses, and adjustments to help determine the value of the business.  Either way, you are buying the cash flow of the business. You will also pay royalties to the franchisor based upon the amount of your sales.  Those royalties will be deducted as expenses from the income, along with the other expenses.    When you look at the adjusted cash flow for both the franchised and non-franchised, you may be surprised to find the royalties paid were not really a factor, as being associated with the franchisor brought in more than enough revenue to offset the royalties.  The brand name and marketing are very beneficial to the franchisee.  

This website is a great place to search for franchises and is clear and easy to follow; so whether you are looking for information on a non-franchised business, a franchised business, or thinking of starting a new franchised business, this website is a good place to start. You are making a decision that can change your life, and any of these three choices could be right for you.  Weigh the benefits of each. It is a personal choice.  Owning a business is a dream many share and is a life changing experience for many families.

  • Author: Pat Jones
  • Title: Business Broker - Business Owner
  • Company: Pat Jones Business Brokers
  • Company Website: http://www.patjones.biz/
  • Date: April 02, 2020
  • Category: Buying a Franchise or Business
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