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Discussion Starter #1
Just trying to help a mate who wants to take on a Franchise business, but doesnt want to buy into the wrong one

Flexible on what they do alongs it successful

Any experiences good & bad apprieciated T:
 

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In my view, the golden rule of buying I to a franchise is to find out how the company make their profit.

If they make money from selling franchises (rather than just charging to cover set up costs and training) then I would avoid them.

If their profit comes from a cut of your profit on an ongoing basis, that's far better. As they have a vested interest in your success.
 

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Agree with neil on that one just be carefull some put in the small print that there percentage raises after a period etc .

They can be good investment if carefull .

There is plenty out there justr depends on there funds
 

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I had one for four years refurbing sash windows all seamed ok to start with the francisor being great helpfull and posative i was making good money and all semed well then i started to dig further into my profit margin and was paying a small furtune every month to him. the long and short of it is i am no longer on talking terms with him and wish him ill. i got francise solicitors involved and as he suspected the hole agrement is sided to the francisor and not the francisee so i was stuffed it cost me a couple of grand and had to pay the francisor nine and half grand to get out.

moral of this story is if your freind is thinking of a francise ask for all financal reports from them ask to speak with outher francises check the francisors out at companies house ask for books for the last couple of years and do your homework
check out restrictions on where you can work and what happens if you can't make it work.

Don't want to sound all unpositive as i am aware that francises do work but the restrictions are a pain in the backside
 

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What's your mates budget? his interests etc does he have / want premises?

A SUBWAY franchise is one of the cheapest circa 6k, but its the 100k you also need to set up the shop,
 

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Discussion Starter #7
Thanks for replies peeps... i will forward them on to him, i have my doubts but he seems dead cert
 

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Flipper I've worked both sides of the franchise business, and what Neal says below is absolutely spot on T:
To be successful for both parties. The franchiser's success needs to rely on the franchisee's profit (not turn over) T:

In my view, the golden rule of buying I to a franchise is to find out how the company make their profit.

If they make money from selling franchises (rather than just charging to cover set up costs and training) then I would avoid them.

If their profit comes from a cut of your profit on an ongoing basis, that's far better. As they have a vested interest in your success.
 
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