Below is a link to the website for International Franchise Association, which is designed to help the prospective investor or businessperson to narrow his or her focus and to develop a sense for the feasibility and desirability of various investment options involving business franchises. Franchises, of course, are licensed businesses...
Below is a link to the website for International Franchise Association, which is designed to help the prospective investor or businessperson to narrow his or her focus and to develop a sense for the feasibility and desirability of various investment options involving business franchises. Franchises, of course, are licensed businesses that utilize already-existing (and presumably successful) business models, trademarked names and logos, and marketing efforts. Most fast-food businesses, such as McDonalds, Taco Bell, and Dairy Queen, are franchised out to independent operators who purchase the right to operate the franchise in question in exchange for an agreement to abide by the central headquarters' policies and practices. That accounts for the uniformity among the many franchisees operating the hundreds of thousands of such businesses around the world. Every McDonalds franchise, for instance, is required to adhere to the basic formula set forth by the corporation even though are they independently owned and operated.
Now, let’s utilize the features of the International Franchise Association’s website, as it exists for precisely this purpose. In completing the assignment, the student should first decide on what general type of business he or she wants to study. The IFA’s website provides a search engine that helps the user to discover the precise business opportunities available within the confines of the user’s specified financial parameters. In other words, choose a type of business—for illustrative purposes, we’ll use food, as that’s a very common business type for those looking to operate a franchise—and then decide, within a relatively broad range, how much money you have or want to invest in a franchise. So, click on “Food: Restaurants,” and then on the “$100,000-$250,000” range, and then look at the short list of options for investment. Click on “Firehouse Subs” as though that is the corporation with which you hope to invest in a franchise. You are now presented with basic information on Firehouse Subs, such as the year the company was founded, how many franchised units already exist, the range of costs to launch the undertaking (i.e., start-up costs), and the total cost of the investment, which, in this case, ranges from $128,760 to $1,160,900, the range probably reflecting a number of factors such as unit size and location, some regions being more expensive to operate in than others.
Once the student has gone this far in the process, the next step could be to contact the corporation chosen, a link to which is, once again, provided in the IFA website. In the comments section, the student should inquire as the details involved in operating a franchise of Firehouse Subs, including the training regimen required of franchise owners to ensure that employees are fully prepared to operate within the corporation’s business model. The student should also go directly to “Firehouse Subs Franchise” website, which provides pertinent information, such as the fact of a $20,000 “franchise fee,” and that 15 to 20 full- and part-time employees will need to be hired.
Next, go to FranchiseChatter.com, which will provide earnings and profit information for franchised businesses, including Firehouse Subs. Against the dollar amounts reflecting “gross sales” for Firehouse Subs franchises, including for both smaller and larger units, one can weigh the value of an investment in this particular franchise. Whether an individual investor concludes that a particular investment is worth his or her while is entirely subjective, but the data provided clearly indicates that an investment in a Firehouse Subs franchise would be a good financial decision.
This example has, obviously, focused on Firehouse Subs, but the same exercise will yield equivalent data for a whole multitude of potential business opportunities. It is up to the student, however, to actually select and research a particular business model. The IFA website is a good place to start.