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low-cost franchise questions

5 Questions You Must Consider Before You Buy a Low-Cost Franchise

Buying a low-cost franchise is an ideal way to limit the risks associated with starting your own fast food restaurant. When you’re comparing different opportunities, it’s vital that you find out whether a particular franchise is a good match with your desired investment level, experience and long-term financial goals. Learning the answers to the following questions can help you make the best possible choice.

1. Is the Franchise Well Established?

A franchise that’s well established can offer the brand recognition that’s critical to help your new business thrive. You can also expect that an experienced franchisor will have the systems and procedures in place to assist you with all the different aspects of starting your business, including choosing a territory, site selection and lease negotiations, day-to-day operations and marketing the brand.

To judge if a franchisor is a good match, you need to learn how long they’ve been in business, the experience of their management team, the level of support they offer franchisees, how many current and past franchise locations they have and whether the brand is well-known with a good reputation.

2. Is the Franchise a Good Fit Financially for a Low-Cost Franchise?

To ensure that a franchise is a good fit for you financially, you’ll first need to determine whether you meet a franchisor’s requirements for net worth and liquidity. Next, ask the franchisor for specifics on the total required investment, because these costs can vary greatly. Some of the expenses you can expect include the franchise fee, your location build-out, equipment, inventory, signage, rent, insurance, professional fees and business licenses.

It’s also wise to ask how much working capital you’ll need to cover royalties and other ongoing monthly expenses, as well as day-to-day operating costs and payroll, until you’re generating a positive revenue stream.

3. Are Existing Franchisees Happy With Their Experience?

Talking to other franchisees can give you invaluable insight into what it’s like to operate your own location and whether the franchise can meet your income goals. A franchisor can provide you with the names and contact details of some of their franchisees, or you can check Item 20 of the Franchise Disclosure Document. Ask each franchisee if the business has met their expectations financially, if they’re satisfied with their working relationship with the franchisor, how long it took to realize a return on their investment and whether they encountered any unexpected hiccups along the way.

4. Does the Franchisor Provide Ample Training and Support?

Training and support from the franchisor are two critically important factors that can directly impact whether your new business gets off the ground. Even though you’re buying a low-cost franchise, you should still expect to receive in-depth training in all aspects of the business, as well as ongoing support from your franchisor.

For comparison’s sake, we help our Pretzelmaker franchisees benefit from our years of experience and fine-tuned processes by providing back-office training on how to manage and run the business, as well as hands-on, in-store training in one of our locations. We also assist with the Grand Opening of each store, and assign a field consultant who’s available to answer questions and help with any future concerns.

5. Is There an Opportunity for Growth and Expansion?

One of the advantages of choosing a low-cost franchise is the opportunity to expand your business by opening multiple locations, either right away or over time. If that’s one of your goals, be sure to ask a franchisor about their plans for future growth and the feasibility of opening additional locations in your chosen geographic area.

To learn more about our outstanding low-cost franchise opportunity, contact us at Pretzelmaker!