Commercial franchise purchasing often requires a good deal of research on the part of the buyer. One of the first things to consider is profitability. If you choose a passive business structure, a return of 10 to 15 percent on your investment may be considered solid. If you are purchasing a franchise, however, your expectations for profitability will be different. After all, you're investing your time and skills into running your business in addition to the money you've put up for it.
Often, new franchisees believe that a lower investment automatically translates into lower profits. However, that's not always the case. Instead of considering only the amount of the investment, it's important to determine whether a franchise opportunity will meet your return on investment (ROI) needs.
The Uniform Franchise Offering Circular (UFOC)
You'll also need to consider a commercial operation's numbers. To determine what you can reasonably expect in terms of ROI, start by reviewing the company's UFOC, paying special attention to item number seven, which covers investment requirements, and item number 19, which covers the earnings of the opportunity's existing locations. With these two pieces of information, you should be able to get an idea of what you can expect your ROI to be over a three- to five-year period of time. Keep in mind, however, that some franchises do not include item number 19 in their UFOCs.
Franchise Purchasing Advice
Rely on us at MatchPoint Franchise Consulting Network for help in choosing a franchise that will not only allow you to use your talents, but will also allow you to maximize your earnings, providing opportunity for growth. We offer free consultations for potential buyers.