In recent times, lots of people have chosen to purchase franchise businesses. That is because they feel it’s easier to build a customer base when trading under an established brand. However, there is still a lot of confusion concerning the financial side of things. With that in mind, we wanted to set the record straight today. By the time you leave us, you should have a basic understanding of how your finances will pan out.
You only pay an initial fee
When you purchase a franchise, you pay the seller an initial fee for using their brand name. That money also covers the bulk of your startup costs. Even so, you still have to look for suitable premises. You will also have to cover the rental costs until you start to make a profit. That means you might need more cash in the bank than you think. You could run the CertaPro franchise from home. However, that isn’t always the case with all franchises. So, it’s important you read through the small print before spending your hard-earned cash. It might be better to wait until you have more money to invest.
You take all the profits
In 99% of cases, you will take all the profits from your franchise business. Some companies require you to pay a small monthly percentage. However, most franchise owners get to keep everything. That means it is possible for you to earn a fortune. Unlike other business owners who need to pay for growth, you have everything you need. Your business doesn’t require expansion because you’ve purchased an entire package. While you could invest profits in savvy marketing campaigns, you could also keep them in your pocket. At the end of the day, you are the boss.
You have to deal with accounting
Very occasionally, we come across a franchise business where the owner can submit accounts to head office. However, that isn’t usually true. In nearly all instances, the franchise owner will need to handle their accounts. That means you need to find a suitable accountant as quickly as possible. There are some resources for business finances. There is also lots of good accounting software. You should avoid that and employ a professional. It’s just not worth the risk if you don’t have any experience. You could land yourself in hot water with the IRS.
You have to find money for marketing
While your initial package might cover some marketing avenues, you will have to pay for most of the advertising. That means you have to put some of your profits aside each month. With a bit of luck, the franchise seller will offer you some suggestions on the best techniques. However, most companies get better results from online promotion these days. So, you might have to brush up on your digital marketing skills.
So long as you understand those basic financial concepts, your franchise business should succeed. As with anything in this world, you need to read any contracts thoroughly. There are few laws governing the terms of franchise deals. That is why you need to make sure you are not getting a bad deal. It’s also worth inquiring with the seller about the support offered. Some will guide you through the entire startup process. Others will take more of a backseat.