The Complete, No-B.S. Guide Offers Advice for First-Time Franchise Investors
Fibrenew’s new downloadable 43-page booklet provides a free service to anyone considering buying a franchise or wanting to understand the franchise business model. The Complete, No-B.S. Guide to Buying a Franchise in 2024 covers the nuts and bolts (and more) in easy-to-understand language.
Jesse Johnstone, president of the Fibrenew franchise, said the free booklet aims “to create something valuable for anybody considering franchising, regardless of whether they have an idea of what they’re looking for. And because of our firm belief and demonstrated success within the franchise model, we also wish to make it clear that Fibrenew is worth a closer look to any prospective franchisee.”
Most of the content is widely applicable, with dozens of brands mentioned. “We’re really pulling back the curtain on the more intricate aspects of franchising relationships that someone wouldn’t hear in marketing or sales interactions,” Johnstone says. “We deep-dive into how to prepare yourself, the less-fun but resoundingly necessary components like royalties and fees, and what to expect when getting started.
“We don’t aim to sugarcoat anything. We just want to equip potential franchisees with the knowledge they need to navigate their franchise search with confidence.”
General Info
The Complete, No-B.S. Guide presents a snapshot of franchising in statistics such as:
- 55% of franchise owners are 45 to 64 years old, but younger generations are growing.
- The overall average initial investment required for a franchise is around $250,000, but this can vary widely.
- 95% of franchises are operated by single-unit owners.
- Service-based franchises contributed significantly to the $787 billion economic output of the franchising industry in the United States in 2021.
- Quick-service restaurant franchises are the largest segment of the franchising industry, with an output of $241 billion.
- Service-based franchises have become a significant and growing sector within the broader franchising industry. The service-based franchise sector has outpaced growth in other franchise sectors, with an annual growth rate of approximately 2.5% over the past five years, according to International Franchise Association figures.
- The number of mobile franchises, which operate from vehicles and deliver products or services to the customer’s doorstep, have increased in recent years.
- Women-owned franchises account for 27% of all franchised businesses globally.
Pros and Cons of Franchising
Fibrenew’s No-B.S. Guide cites the advantages and potential disadvantages of investing in a franchise. Advantages include a lower failure rate than an independent start-up businesses, brand recognition, an existing customer base and easily accessible help with business challenges.
That doesn’t mean a franchise will automatically put you on easy street, though. “It’s a common misconception that you’ll invest your money, get trained, open your doors, and the business will grow itself,” Johnstone says. “While the brand may be recognized, growing the franchise still takes effort, patience and focus. Local marketing is still needed in order to be a success.”
In the negative column are a lack of autonomy (a franchisee must follow the brand’s system) and upfront costs. Some wannabe entrepreneurs would chafe under the operational restrictions imposed by the franchisor; others don’t have adequate start-up capital.
Wide-Ranging Advice
The guide isn’t stingy with advice. First off, it recommends that potential franchisees contemplate their passions, skills, interests, strengths, goals and financial readiness. “Understanding yourself is the first step in finding the right franchise,” the booklet states.
Then the entrepreneur, after identifying his or her ideal niche, should shine a light on the marketplace, examining location, competition and target demographics. Most important, evaluate market demand: Will the franchise fill a vital gap? “Look for enduring market needs rather than trends that might fade,” the guide advises.
Which particular brand will be best for you? Study reputation, history, support systems and financial requirements. Is the brand keeping up with technology, a requirement for long-term success? Does it demonstrate environmental and social responsibility, which are important to today’s consumers? All of these factors can help to narrow brand choices. After that’s done, request the Franchise Disclosure Document (FDD) from each franchisor. Drill down thoroughly into the FDD and consider consulting with a franchise attorney to ensure you fully understand all terms and conditions.
To further inform your decision, speak with current franchisees to get the lowdown on franchisor support, business challenges and your future franchise family. Johnstone heavily emphasizes this step. “Speak with as many active franchisees in the system as possible.” He adds that it’s also crucial to “talk with the training and support teams and the leadership group. Spend a day or two in the field to see how the business is operated.”
Explore the franchisor’s culture and values, which should align with yours. Johnstone says franchisee candidates often don’t dig into the brand’s culture deeply enough. The biggest mistakes during the discovery process are “not thoroughly understanding the company’s culture, their support team’s philosophy, and the quality of the franchise community. You’re about to ‘get married,’ so to speak, so clearly knowing the values of the franchisor is vitally important,” he says.
Advice for First-Time Franchise Investors
The guide explains the full range of expenses, starting with the initial franchise fee and moving on to leasehold improvements, royalties, training and support fees, and franchise renewal fees, among the many other expenses that franchisees must shoulder.
Fibrenew’s No-B.S. Guide also explains franchise agreements, which are legal contracts between the franchisor and the franchisee. The guide suggests having a lawyer review the document with you to clarify understanding of obligations of the franchisee and franchisor.
Near the end of the booklet, the guide discusses what to expect during the first year in business as well as the importance of long-term planning. And it reminds readers that “ambitious entrepreneurs will endure. Sustainability will endure. Franchising will endure. Just remember that you must think long and hard about what your goals are for your future. It’s crucial to recognize that franchising is a unique endeavor – but is not for everybody. Being in-depth in your search for the right franchise fit will safeguard your success.”
Download your free guide here.
