Chapter 9: Franchise FAQs

FRANSAVE is proud to partner with Guidant Financial to provide you with the tools you need to fund your new business. From exploring financing options to obtaining expert guidance, the services provided by Guidant Financial are designed to help aspiring business owners get established and—ultimately—thrive.

Guidant’s Complete Guide to Buying a Franchise outlines what it means to be a franchise owner. We have broken down the guide into segments to give prospecting franchise owners an understanding of hidden costs, important documents, and the overall journey to franchise ownership. This introduction to the Guide is the first step.

The journey to becoming a business owner is exciting…but can be overwhelming at the same time. There are a variety of options and opportunities available to you – the world is your proverbial business oyster. This guide is designed to familiarize you with what it means to own a franchise, help you decide if being part of a franchise suits your goals and personality and take you through the ins-and-outs of the journey to franchise ownership.

The Six Most Frequently Asked Questions About Franchises

You’ve done it! Welcome to the last chapter of the Complete Guide to Buying a Franchise. Most of the information in this section will be old news to you, but feel free to come back here for a quick review whenever you’d like.

1. What is a franchise?
   A franchise is an arrangement where the owner of an existing brand and business model gives you the right to use said brand and business model (with all attending trademarks, products, systems, etc.) in exchange for money. In the franchise system, the owner is the franchisor and you are the franchisee. Read more about franchising in Chapter 1.
2. How do I pick a franchise?
   There is no “perfect” or “best” franchise – they all have their strengths and weaknesses. However, you can narrow them down through the use of personality and fit tests, personal research and franchise consultants. Check out Chapter 2 for more information.
3. What is an FDD?
   The Franchise Disclosure Document is a document that franchisors are legally obligated to present to potential franchisees. It is designed to provide specific, accurate information about the franchise so the potential new franchisee can make an informed buying decision. Known for being long and complicated, the FDD covers such topics as litigation and bankruptcy history, fees and initial investment amounts and the legal obligations of both the franchisor and franchisee. We cover the FCC in depth in Chapter 6.
4. How can I finance my franchise purchase?
   There are a variety of options available to you for purchasing a franchise. It’s a misconception that new business owners can’t get funding – they just have to look in the right places. 401(k) business financing, SBA loans, unsecured loans, and portfolio loans are just a few of the available options. Dive into the funding landscape in Chapter 7.
5. Is it easier to finance a franchise purchase than an independent business?
   Getting an SBA loan can be a little easier for a franchisee if your brand is pre-approved for loans by the Small Business Association. However, you will still need to meet certain qualifications. For finance options like 401(k) rollovers or portfolio loans, your business type doesn’t matter.
6. How much does a franchise cost?

The range of franchise costs is wide. Some as low as $1,000 and others into the low millions. However, often your initial franchise fee will sit between $10,000 and $50,000. Other costs will include the construction of your location, equipment, materials and the royalty fee. You can learn more about these costs in Chapter 5. The actual cost of your franchise will be laid out in your brand’s FDD.

And with that, congratulations are in order! You’ve officially made it through the entirety of this guide. We hope this has provided value and helped increase your understanding of the franchise process. Good luck with this new adventure!