Frequently asked questions

A franchise is a business model where a company (the franchisor) licenses its proprietary operations, systems, and brand to independent business owners (franchisees). In this arrangement, franchisees are granted the rights to sell products or services under the franchisor’s established name and brand, adhering to their proven business model and operational guidelines.

Franchising plays a significant role in the U.S. economy, with nearly 750,000 franchise establishments employing over 7 million people and contributing approximately $670 billion annually. This business model offers entrepreneurs the opportunity to run their own business while leveraging the reputation and support of a recognized brand.

With over 4,000 franchise brands available in the U.S., finding the right one can be overwhelming. A franchise consultant brings invaluable expertise and insider knowledge to guide you through this complex landscape. Here’s why working with a consultant is beneficial:

1. Expert Guidance: A consultant helps you quickly understand the franchising industry, enabling you to make informed decisions.
2. Tailored Recommendations: Consultants match you with franchise opportunities that align with your personal and financial goals, maximizing your potential for success.
3. Avoiding Pitfalls: Leverage the consultant’s experience to navigate common challenges and avoid costly mistakes.
4. Access to Resources: A consultant can connect you with specialized legal and financing resources to support your franchise journey.

Consultants, like those in the FranChoice network, work with top-tier franchises, including industry leaders and promising emerging brands, ensuring you’re presented with the best options.

Using a franchise consultant’s services comes at no direct cost to you. Here’s how it works:

• No Fee for Services: You do not pay for the consultant’s guidance. The franchisor compensates the consultant when you successfully purchase a franchise, similar to how an executive recruiter is paid by the hiring company.
• No Extra Costs: The franchise fee remains the same whether you work with a consultant or go through the process independently.
• Independent Expertise: Franchise consultants work for you, not the franchisors. Their primary goal is to help you find the best franchise match for your needs, with no allegiance to specific brands.

This structure allows you to benefit from professional advice without incurring additional costs, making the franchise selection process more informed and less stressful.

Franchising offers a unique opportunity to build a business on a proven model, but it’s not for everyone. Consider the following:

• Proven Systems: Franchises operate on a ready-made concept with a detailed operations manual. If you prefer creative freedom and experimentation, franchising might not align with your style.
• Management Focus: Franchisors typically seek franchisees with strong management skills rather than specific industry expertise. For example, you don’t need to be a CPA to own a tax service franchise.
• Flexible Involvement: Whether you want to be deeply involved in daily operations or take on a more hands-off role, franchise opportunities exist to suit your preferences. Many franchisees are corporate executives looking for a wealth-building investment that requires minimal oversight.

Franchising is an excellent option for those who value structure, support, and the potential for growth within a proven business model.

There are several ways to finance your franchise investment, depending on your financial situation and goals. Common financing methods include:

• Cash On Hand: Using personal savings to fund your franchise.
• Selling Liquid Securities: Liquidating stocks or other securities to raise capital.
• Portfolio Loan: Borrowing against your investment portfolio.
• Home Equity Line of Credit (HELOC): Using the equity in your home to secure financing.
• 401(k) / IRA Rollover: Rolling over retirement funds into your franchise investment without penalties.
• SBA-Guaranteed Loan: Obtaining a loan backed by the Small Business Administration.
• Partnerships: Partnering with others to share the financial burden and rewards.

Choosing the right financing option is critical to your success. It’s essential to evaluate each method carefully and consider consulting with franchise lenders who specialize in helping franchisees. A franchise consultant can refer you to trusted financing providers who understand the unique needs of franchise investments.