Is buying a franchise right for you?
How do you know if buying a franchise is right for you?
This is a question I asked Tom Miller when he was the guest on my radio show on April 16, 2013. Tom is the Executive Vice President of Murphy Business and Financial Corporation. He’s also a 33 year veteran of the franchise industry, but as Tom likes to say, who’s counting. And as Tom’s wife Diane also likes to say, when you get to Tom’s age counting has little to no appeal.
As Tom has been involved in the franchise industry for such a long period of time, it was a good opportunity to ask him some questions as he has seen so much including all the different fads and trends.
One of my first questions to Tom was therefore, how does a franchise buyer know if owning and operating a franchise is right? To answer the question, Tom gave some interesting insights. As Tom said, there are no absolutes, but buying a franchise definitely appeals to certain people at a certain stage in their life and the statistics show that a typical franchise buyer includes the following:
- Is between the ages of 35 and 55 years old
- Come from a Corporate Management background
- Have an average income of between $60,000 to $150,000 per year
- Have a net worth of between $250,000 and $600,000
- A majority of franchise buyers have an IRA or 401k Retirement plan and many plan to use this as a down payment to buy their franchise
- In order of those that will buy a franchise, men come first, then couples and then women.
- Typically, most franchise buyers will not have owned a business before.
- Typically, the franchise buyer wants to become an entrepreneur, build their franchise or business and then when they are ready to retire, sell the franchise and use the funds to support their retirement.
- What attracts most franchise buyers is that the franchisor provides the initial support and training to open the business and then provide the ongoing training and support as well as the sales and marketing.
Some of the other questions I asked Tom and the answers you will hear include:
- What makes a good franchise buyer?
- What research would you recommend someone do if they want to buy a franchise?
- What are the different franchise formats available?
- What finance options are available?
- What’s the best way to investigate a franchise opportunity?
- What’s the FDD or Franchise Disclosure Document and what’s its purpose?
- There is an incorrect perception that most franchises are in the food or auto industry. What types of industries can a franchise buyer find?
My conversation with Tom was for about 40 minutes. I was able to ask him many questions. If you would like to listen to my conversation with Tom on my radio show by clicking on the following link – Conversation with Tom Miller.
If you have an interest to buy a franchise and want more information, here are three options available to you. The simplest is to click on this link which will take you to a page on my website that breaks down the steps to buy a franchise. If you prefer to do some research you are welcome to buy a copy of my book – Successfully buy your franchise. Finally, if you have questions and want answers simply give me a call on 916 570-2674.