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Top 5 Things You Need to Know Before Opening a Franchise

For today’s hungry entrepreneurs, investing in a franchise is no doubt, one of the most profitable business decisions one can make. With promises of making cash quickly, it’s no wonder so many people flock towards opening up their own business. Franchise companies are fantastic investments, because their model has been proven successful time and time again, from marketing and branding to pricing to generating revenue. But before you rush to invest in your own franchise, here are the top five things you should pay attention to before making your business decision.

  1. Find a model that financially makes sense. Too many times, we’ve seen entrepreneurs eagerly make the wrong decision when purchasing a franchise unit. Without conducting the proper financial research such as the minimum buying requirements, you run the risk of not actually being able to truly afford the investment. Most franchises even require additional capital to offset the expenses for the first three to six months or more. Spend the time to educate yourself!
  2. Invest in a physical office space. Even if you’re investing in a franchise such as commercial cleaning, it is imperative that you lease or purchase a designated office space. Not only does it develop a sense of company culture, but having an office (other than outside of your home) creates an operationally savvy environment, which will help keep your turnover low and your profit high.
  3. Understand the time it takes to be profitable. When you invest in most franchises, keep in mind that in order to be profitable, you may have to wait at least two years. That’s why we encourage potential franchisees to have patience throughout the process. There’s a big difference between waiting two years versus six years to start making money.
  4. Talk to other franchisees. For any franchisor, the best indicator of success is that franchisees are happy with you. High franchisee satisfaction rates speak volumes with how successful the overall franchise brand is. You may want to check out publications such as Franchise Business Review’s listing of Top Franchises in Franchisee Satisfaction to see if your potential franchisor has made the cut.
  5. Actually read the FDD. Though these documents are never less than 50 pages, they are filled with key information regarding fee structures, estimated initial investment, bankruptcy filings, and litigation. This information can be helpful in your decision on which franchise brand to choose.

Franchising is a great way to strategically invest your money and offers you the freedom to start your own business in a relatively short period of time. Unlike starting your own business from scratch, becoming a franchisee also gives you the ability to lean on other Franchise Owners for ideas.

If you’re thinking about investing in a franchise, check out Anago’s Executive Master Franchise model, where you are the CEO of your own franchising company . You can find more information here:


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