Is a Franchise Model for You?

Wondering if a franchise model is for you? When you work with Pacific Business Brokers, you will have the confidence in knowing whether or not a business path is right for you. We help guide you through the process and will answer any questions you have. Why not take a more in-depth look at the business of franchises in this video called “Is a Franchise Model for You?”

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To Franchise or Not

Are all business forms the same? When it comes to franchises or non-franchise businesses, buyers will seek to understand what’s important to them.

Hello, I am Arthur Klein business broker with Pacific Business Brokers.

A simple definition for Franchising is the practice of using another firm’s successful business model, where the franchisor is often also the product supplier, and allows an operator, or a franchisee, to use the supplier’s trademarks and or trade names, under license, and, to distribute the supplier’s goods or services. In return, the operator or franchisee most often pays the supplier a royalty fee.

A successful franchise model will be one where the operating systems, formal training, purchasing power, marketing, real estate assistance and more, are well established, and constantly tested and improved.

Are franchises meant for everyone?

On paper, it would appear that franchises, given the investment and performance of its model, would offer returns to an owner at lower risk.

From our experience, the qualities or skills that a buyer should bring to the equation are motivation, open-mind, management and HR skills, vision and more. And whether as a franchise owner or independent business, these are important qualities that are desirable in both.

So then, what’s the difference? In a word, “risk.” Risk – whether financial, time or opportunity, will be to differing degrees, present in any business form or structure. For buyers, the tolerance to risk will be a key determining factor of business investment.

People with high-risk tolerance are said to be decisive, have clear criteria and objectives. Those buyers with low-risk tolerance tend to be skeptical, apprehensive and resistant to change. Franchises, with well-established models and systems by default, will naturally be attractive to low-risk buyers as a portion of their investment will be these benefits.

At Pacific Business Brokers we can help you learn about the risk parameters found in business, and provide valuable guidance based on our understanding of your goals, and where you can then focus on investments that best fit your criteria, and you.