How to Buy a Low Cost Franchise Business

Its not hard to find hundreds of low cost franchise opportunities (under $35,000 investment) on the internet. How do you choose one with real income potential that is not a scam?

Instructions

1. OK, you don't have $100,000 to $500,000 to buy a Subway, 7 Eleven, or McDonald's franchise and you're looking for a low cost franchise business. Here are some considerations:

2. Do your research on franchises and franchise contracts. Start with the Federal Trade Commission brochure "Buying a Franchise: A Consumer's Guide." You can find it at this link: http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv05.pdf
   You can click on this link at the bottom of this article.

3. Check out reputable franchise websites like franchise.com and entreprenuer.com. Pay special attention to their higher rated franchises. Be careful of websites where low-cost franchises pay to be listed.

4. Talk to a franchise broker who can provide a lot of information on franchise opportunities. Bear in mind that franchise sellers pay brokers and some brokers may favor or try to promote franchises which pay them higher fees.

5. Beware of scams and hard sells. What business experience do the president and principal officers of the franchise company have? Find out if they ran other companies and their record in these companies.

   Does a franchise company rep care about your background and credentials or does he just want to sell you a franchise? A legitimate franchise company wants to promote a good reputation and won't sell franchises to people without checking them out to make sure they are qualified and will make their company look good.

6. Speak to several franchisees of any businesses you're thinking of buying. Try to "shadow" them in their work. Keep in mind that although most franchise owners will welcome you to their business, some may want to discourage you from competing with them or buying a neighboring franchise territory they may have their eye on. Others may exaggerate their success. (Who wants to admit their business is failing?) Carefully consider what franchisees tell you and take notes on what you see about their businesses.

7. See if non-franchise business opportunities might suit you better such as direct sales. Worth considering:

   Cosmetics: Avon, Mary Kay
   Kitchenware: Pampered Chef
   Home/Buisness goods: Amway
   Financial Services: Primerica

   Find more direct selling ideas at the Direct selling association website, http://www.dsa.org

8. Before signing any franchise agreements or making any payments, write up a business plan that lays out estimated expenditures, supplies, staffing, advertising, and where you will conduct your business.

Resources

• Buying a Franchise: A Consumer's Guide (FTC brochure)