Franchises have gained steam over the past decade, and it’s not difficult to see why. Entrepreneurial types can appreciate the marketing, product, and financial support afforded by franchisers while enjoying the challenge and excitement that comes with owning one’s own business. With the right franchise, you could be set for life. With the wrong one, on the other hand…well, it isn’t pretty. CPA Ann Irons has worked with all types of small business owners, and has learned what it takes for an entrepreneur to thrive.
As you consider various opportunities, Ann advises you to research industry growth, satisfied (and unsatisfied) franchisees, earnings records, and unit growth. Look for business opportunities that enable you to pursue the things that you are most passionate about. For example, you might look into a franchise for a boutique fitness center, restaurant, or childcare provider. Finding a good match will make it easy to wake up each morning, ready to build your business.
Don’t Forget the Detailed Disclosure Document
If you decide to pursue a franchise, you can count on some help from the Federal Trade Commission, which regulates the sector. Support isn’t necessarily financial, but the government provides excellent resources to help you determine which options are most promising and which are scams. For example, the FTC’s Franchise and Business Opportunity Rule stipulates that all franchisers must provide detailed, specific data to support informed decision-making. This Detailed Disclosure Document includes stats and earnings info, including:
- A compete executive profile
- A fully audited financial statement
- Realistic expectations for maintenance and startup costs
- Expectations for both the franchiser and franchises
- Detailed contact info for a minimum of 10 previous franchisees nearby
You must receive the Detailed Disclosure Document 10 days prior to signing any agreement with a franchiser. If not, Irons advises you contact the FTC hotline at 1-877-FTC-HELP.
Objective Assessment From a Third Party
Although most franchisers present accurate, current financial data, they tend to do so in a way that appeals to your desire to succeed. You, not the franchiser, are in the best position to determine whether an opportunity is financially feasible. With the help of an experienced CPA, you can better evaluate your position. Ann will sit down with you to lay out the specifics, answering such questions as:
- How much will it really cost to buy and operate the business?
- What is a realistic potential profit, given my available resources?
- Do I have enough to invest now, or should I wait to commit?
Addressing these concerns now helps you to avoid losing your investment in a fraudulent or lackluster franchise opportunity.
Considering a franchise opportunity? For answers to questions about franchising, or to request a consultation with Ann Irons, CPA, LLC, contact our Bellingham, MA CPA office at 508-966-0700. Irons, who has worked with the “big five” accounting firms, has had her work published in Banker and Tradesman.