Executive Summary By Owen E. Richason IV
Entrepreneurs wishing to open a business might benefit from investing in a franchise opportunity. Franchising is buying the use of an established business model. Franchisees are given distribution rights of a franchisor's product and/or service for a fee and a percentage of gross profits.
How to Finance a Franchise Restaurant
Advantages include buying into a known, established concept; moreover, the franchisee will benefit from the franchisor's promotion and experience. Franchises also offer customer loyalty programs and the franchisor may also provide consumer surveys to better help the franchisee market and cater to their patrons.
A disadvantage is the franchisee's limited ability to mold or direct the concept and/or business model.
Franchisors require of their franchisees not only an initial investment for the use of concept rights, but a percentage of gross proceeds (typically on a monthly basis) known as royalty fees, plus ongoing contributions to the franchisor's advertising budget.
Franchises, like any other business venture, require start-up capital. Regardless the source of investment capital, potential franchisees will need a sound business plan and should likewise become familiar with the franchise itself by way of Internet research, visiting franchise locations and taking advantage of the franchisor's literature. Financing can also be found through business brokers.
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