Articles on Business Matters:

Should You Buy A Franchise Business?

It is a well known fact that as the population increases then the number of people wanting to go into business increases –obvious but true.

This is despite the fact that a large amount of businesses fail within the first two years.

Ideally one would like to purchase a business for less than it takes to create one – this is not always easy and can take as much effort as the former.

So just how does one take the choice of whether or not to uptake the business opportunity?

The decision can be helped by the work taken to look at the factors affecting the eventual outcome.
What is commonly misunderstood is that businesses have their life-cycles –if you are lucky enough to buy a business when its life-cycle is still enhanced by its customer loyalty then it is fortunate but if one is basing their future on this then it can be touch-and-go.

So what should one look at when purchasing a business franchise?
Establishing a customer base
Internal systems and procedures
Market awareness and credibility
Premises and cash-flow
Staffing

Franchising is such a popular industry due to the ability to focus on the first three points.

It must be noted that, however, as with any business, it essential to establish a customer base.

Also, it is important to ask oneself whether or not the customers will stay happy in the long-term; this is of paramount importance as it is the key, obviously, to the longevity of the business.

Some schools of thought believe that it is a good idea to have a "work-out" clause included- this involves the owner taking part in the business for a period so that the owner's skills may be put to the business in its early stages.

What may also be apparent to existing franchisees is the fact that the aforementioned points seem ridiculously transparent but to the unaware may be at first un-noticed.

Again, what may seem apparently clarent to pre-existing franchisees is the need to do the customer approach-whichever business one is involved in; it requires customer contact and this can be the making or braking of a business.

So in deciding to take on a franchise opportunity the potential franchisee must ask almost the same number of questions as that of a person looking to begin a brand new business-what is the integrity behind the business? What are its potential advantages/disadvantages? What are the staff needed? Are there any premises needed-if so how, much area? What logistics are required? Internal systems and staffing? Rent and rates? The list goes on.

Financing of course takes pride of place as this is one of the major reasons we strive to create anything in the world of business.

In my opinion it is essential to ensure that sufficient funds are available to take care of the bad times, and with previous experience it is recommended to expect some problems with any and every opportunity.

However, this being said, the fruits of pursuing this course are plenty otherwise people would not go into these ventures.

The question thus prevails-to buy or not to buy a business franchise?

Naz Daud
06 June 2007

Naz Daud is the founder of CityLocal. This Business Franchise Opportunity is for people who would like to work from home and be their own boss. Business Franchises and UK Business Directory Business Franchise Opportunity Ireland Business Directory & Franchise Opportunity

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Why Do Some Franchise Businesses Fail?

Buying a franchise business is supposed to be the least risk way to start a business. But is owning a franchise guaranteed to make you money? Not necessarily… the truth is that some business franchises are extremely hard work especially in the fast food industry.

Most people know about the franchise industry due to the fast food franchises that specialise in providing the same quality of food all over the world. They guarantee the same eating experience irrespective of where in the world you buy a meal.

Think about it, in the food industry, you have to open your business in time for breakfast and stay open until late evening. Most fast food franchise owners can easily work a 12 hour day. They can also forget about weekends off as this is the busiest time for sales! This business would only suit somebody who is prepared to work hard for at least 60 to 70 hours a week!

The people who joined the fast food industry in the early days by buying a franchise opportunity have done remarkably well. Now, in many areas, this market is saturated with many different franchises trying to compete for your food money. They range from sandwich shops, coffee houses, burger joints, fried chicken outlets, donut establishments and pizza stores.

As the rates and rents for high street premises have risen in value, the cost of a meal in these fast food franchises have actually fallen when you take inflation into account. This has meant that overheads have risen whilst income streams have dipped. It is now harder then ever to make serious money with a fast food franchise opportunity.

To compete in this ever burgeoning market place, fast food franchisors are now demanding very expensive shop fittings so that the business can be highly visible and comfortable for the customers. They are also offering regular special offers which are often sold at near cost price, making their franchisees next to no money and generating a lot more work.

Another problem for franchise owners is the regular franchise fees that have to be paid to the franchisor. These combined with huge staffing costs and high rentals can all add up to reduce the profitability of the business model.

In recent times the market has become even more competitive with supermarkets now entering the fast food business. Many supermarkets are open 24 hours a day and you can pop in and buy decent food extremely cheaply. They have fast food counters where you can buy fried or roasted chicken, pizzas (made with your own choice of toppings), curries and salads without making a huge dent in your pocket.

Supermarkets also have another weapon in their armoury. With the advance in food preparation techniques and improvements in packaging, cheap ready made meals combined with the falling costs of microwaves mean that some families never need to go near a fast food franchise, even if they do not like to cook.

Even fuel stations have entered the fast food industry. Many outlets now sell meals that you can microwave in minutes after filling up fuel.

The final problem in the fast food industry has been the improvements in food quality and hygiene being demanded by the ever increasing health and food regulations which are designed to protect us from undercooked, stale or contaminated food. Anybody serving food now has to keep extensive records and maintain the food storage areas to precise temperatures. Fresh ingredients, if not used by a certain date have often got to be chucked away. This leads to wastage especially in foods like salad which do not have a high shelf life.

Taking all the above into account, the market is now extremely competitive and in some areas totally saturated. Be very careful if you are deciding to buy a fast food franchise opportunity and do your homework carefully. Make sure you take proper business advice from your accountant and franchise lawyer.

Naz Daud
06 June 2007

Naz Daud is the founder of CityLocal. This Business Franchise Opportunity is for people who would like to work from home and be their own boss. Business Franchises and UK Business Directory Business Franchise Opportunity Ireland Business Directory & Franchise Opportunity