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Franchise

10 Best Small Business Franchises You Can Buy

The Best Small Business Franchises You Can Buy (And How)

It can be difficult to know where to start when it comes to small business franchises. There are companies that require an incredibly large upfront investment–often over multiple hundreds of thousands of dollars or more– and others that provide low actual support in return for their low fees. Even so, all you need to do is to be sure and optimistic. 

You can do it. And it doesn’t have to cost you millions

If you are serious about opening a small business franchise in 2020, we assembled a list of the best franchising business opportunities. The small franchises you’ll read below have all of the next features:

  • An affordable initial investment
  • A good reputation 
  • And high potential growth 

The start-up of a company can be expensive and many people can not spend a million dollars to run their company. The good news is that for a profitable business to begin, you do not need that money. There are lots to buy for 25,000 dollars or less.

Franchising companies come from all sorts of sectors —from sports to tax services— and there are plenty of choices that can suit your preferences, abilities and budgets.

Why Choose a Small Business Franchise?

The biggest obstacle to the contemporary entrepreneur’s growth is capital insufficiency. And franchising allows companies to grow without the possibility of debt or equity costs. In comparison to purchasing an existing business or beginning a new one from scratch, a franchise has its advantages and disadvantages. Nonetheless, special requirements are needed, as becoming a partner in a bigger organization when you are a franchisee, makes you an essential part in a larger business structure. 

A small franchise can be a strong first step into a life of wealthiness, if you have what it takes, then give it a try!

Weigh the Pros and Cons

As most things in life, you have to ponder on the advantages or disadvantages of any decision you are about to make, and with the small franchise business, this is no exception. Always remember to weigh the pros and cons of any franchise you have the eyes on, and if you have enough income to make it thrive. To make it easier for you, here are the main advantages and disadvantages of starting a franchise:

Advantages 

  • Low business risk
  • Recognition
  • Support
  • Training
  • Great marketing and advertising 
  • Financing assistance
  • Site selection

Disadvantages

  • Royalties
  • Franchise fees
  • No total control (franchisees attain to the franchisor’s will)
  • Termination clauses
  • Required purchases

 

Pick the Right Franchise Or Existing Business For You

 


There are many places to look for when considering to buy a
franchise, but going directly to the franchisor is the most obvious place to start; even more so if you already have a pretty good idea in which franchise you are interested in. By doing this, you can provide the franchisor with all the details you would need to purchase a franchise. This is the perfect way to start and pick the right franchise or existing business for you.

An alternative —one that’s not so obvious as to achieve the same outcome and likely savings—is to meet current franchisors that wish to sell their franchises. When you take over an existing franchise, you will save money because you are not paid the franchiser’s franchise fee.

When the seller demands a price for the franchise being sold, you will pay the equivalent of a franchise fee to the franchise seller. When contrasting that with the expense of a franchise fee on a new franchise, you can see if the premium is fair. A current franchisor that wants to sell the franchise may be able to give a name to you. In the end, a variety of franchisors will buy back franchises and run them until they are able to find a suitable buyer.

If you have no idea where to start regarding small franchise business, then you can consider a franchise consultant. A franchise consultant is someone who helps you decide, at no cost, what kind of franchise is better for you, and in case you’ve decided on the category or concept, a consultant can be someone that helps guide you towards the best brand for your goals and financial capability.

You can also try looking in any of the next options:

  • Newspapers 
  • Internet (with caution)

To make this easier for you, here is a list of the 10 small franchises to invest in 2020.

 

JAN-PRO

JAN-PRO Franchise
from jan-pro.com


A Sample franchise offers industrial cleaning services to businesses and incorporates two types of franchises in its
business model. The first is a homeowner franchise or a cleaner unit franchise. The second is a master franchise which operates a group of units.

Start-up cost
  • Initial investment: $3,985 to $51,600
  • Initial franchise fee: $2,520 to $44,000
Number of franchises
  • 10090 units in operation

 

Cruise Planners

Cruise Planners Franchise
from cruiseplannersfranchise.com


Also an example of easy franchise opportunities, this vacation planning franchise is aimed at folks who want to work from home and have a passion for travel.
Cruise Planners franchisees sell full-service vacation packages, including cruises, land-based vacations, trip insurance, and car rentals. A Florida-based company was started by veteran travel agent Michelle Fee in 1994 and began franchising in 1999. Getting started costs $10,995 and includes a six-day in-person training course in Fort Lauderdale, Florida, ongoing home office support and $1 million in insurance.

Start-up cost
  • Start-up costs: $10,995
Royalty fee
  • Royalty fees: 1%–3% of gross commissionable fares
Number of franchises
  • No. of U.S. franchises: 2,569

 

Complete Weddings + Events

Complete Weddings + Events Franchise
from completewedo.com


The weddings market is 72 billion dollars a year, so you have a slice of this business. For $10,000, franchisees get training and continuous support to deal with grooms, and brides, as well as DJs, videographers, photographers, and such. Complete Weddings + Events teaches franchisees how to recruit and charge these professionals and keeps them up with wedding prices in their market. The first wedding at Complete Weddings + Events was held in 1974, and the company manager, Jerry Maas, began franchising in 1983.

Start-up cost
  • Start-up costs: $10,000
Royalty fee
  • Royalty fees: 8% of annual gross revenue
Number of franchises
  • No. of U.S. franchises: 192

 

Showhomes Home Staging

Showhomes Home Staging Franchise
from showhomes.com


The
Showhomes Home Staging business takes empty and other houses for sale and transforms them to a sleek, tidy and trendy appearance with temporary furnishings and accessories.

A Coldwell banker real estate study showed that the houses that have been staged spend half the time on the market than those that have not been staged and sell over 6 percent above the price offered. Potential franchisors will start with $10,000, which includes training at the company headquarters in Nashville, owned CRM software, development of websites, hosting and SEO and a one-on – one company coach.

Start-up cost
  • Start-up costs: $10,000 (Based on 2018 data)
Royalty fee
  • Royalty fees: 10% of annual gross revenue
Number of franchises
  • No. of U.S. franchises: 55

 

Image One

Image One Facility Solutions Franchise
from imageonefranchise.com


The cleaning service is profitable, and Image One is clear proof. Image One was launched in 2010 as a commercial cleaning company. In the following year, it began to franchise with 103 franchises throughout the country. For $15,000, franchisees get trained to qualify in the commercial method of cleaning services—supplies, equipment, billing and so on. Furthermore, Image One provides assistance with insurance and discounts for supplies and equipment.

Start-up cost
  • Start-up costs: $15,000
Royalty fee
  • Royalty fees: 10% of annual gross revenue
Number of franchises
  • No. of U.S. franchises: 103

 

Motto Mortgage

Motto Mortgage Franchise
from mottomortgage.com


Mortgage shopping is usually one of the least enjoyable parts of buying a home. This is the target of
Motto Mortgage. Launched in 2016, the franchise combines designers and immobilizers to provide homebuyers with a seamless one-stop experience. Each bureau is operated separately, and potential franchisors will start up in cash for $12,500. There’s even $47,800 to $68,100 in extra initial investment. This includes a three day courier training course, which covers various mortgage products and services at its Headquarters in Denver. 

Start-up cost
  • Start-up costs: $12,500
Royalty fee
  • Royalty fees: $0 for the first 6 months, increasing to $4,500 per month after one year in business
Number of franchises
  • No. of U.S. franchises: 100

 

Rhea Lana’s

Rhea Lana"s Franchise
From rhealana.com


The eponymous consignment franchise for children’s apparel was launched in 1997 and extended into 22 countries. It gives prospective franchisors the opportunity for $15,000 to plan big all consignment activities on the land they buy.
Rhea Lana’s offers training to franchisees, its own inventory tracking systems, barcoding, and even website design. The business says that its franchisees work for a consignment case in an intermediate market two or three months a year and do all they can at a full time job.

Start-up cost
  • Start-up costs: $15,000
Royalty fee
  • Royalty fees: 1%–3% of gross sales
Number of franchises
  • No. of U.S. franchises: 89

 

Monster Tree Service Franchising

Monster Tree Service Franchising
from whymonster.com


Established in 2008,
Monster Tree Service® has quickly become the most trusted, successful and recognized tree service franchise in the nation.  We’re a national brand with local experts.

Monster Tree Service® is a home-based franchise opportunity that offers:

  • Multiple Revenue Streams
  • High Repeat Sales
  • Great Profit Margins
  • Scalable Growth
  • Normal Hours

If you are looking for a solid, sustainable business model that is fun to operate and makes money, and can see yourself in business with the nations’ number one Tree Care franchise, Monster Tree Service® might be the perfect franchise for you 

Start-up cost
  • The initial franchise fee for a single territory is $49,500. It includes an exclusive, protected territory of at least 200,000 in population.
Royalty fee
  • Royalty fee: royalty rate is 6.5% of gross sales
If you’re interested in the tree service franchise business, then you can get free and honest consultation regarding the subject on Tree Franchise, as they specifically work with people that’s looking for a tree franchise to invest in. Or you can read our full Monster tree service review here.

 

Help-U-Sell Real Estate

Help U Sell Franchise
from helpusell.com


In order to sell the house on the basis of a selling price, most real estate brokers charge a fee of about 3 and 6 per cent or more. Established in 1976,
Help-U-Sell Real Estate has a special playbook. It was the first real estate service fee franchise in the world, which means that it charged a flat fee for the listing, marketing and sales services of the business. It costs $15,000 for start-ups including preparation, funding from the front and back office, publicity and constant coaching.

Start-up cost
  • Start-up costs: $15,000
Royalty fee
  • Royalty fees: 6% of gross commissions
Number of franchises
  • No. of U.S. franchises: 102

 

United Country Real Estate

United Country Real Estate Franchise
from unitedcountry.com

United Country Real Estate specializes in country, rural and lifestyle properties, and is one of the largest property franchising organizations in the world. The United Country approach is a lifestyle rather than an emphasis exclusively on where a customer wants to live, whether it be small towns, ranching, forestry, waterfront sports, or fishing. For $15,000, franchisees can receive an onboarding package for a year’s workplace, live webinars and on-demand training library.

Start-up cost
  • Start-up costs: $15,000
Royalty fee
  • Royalty fees: $1,200–$2,400 per month
Number of franchises
  • No. of U.S. franchises: 443

In conclusion, choosing to invest in a franchise, no matter if small or big, can be a decision you will be mostly grateful for in the future. All it takes is for you to do the right research and ask professionals for help, so no matter what decision you make, you can be certain that you did the right thing. Small business franchises are a great way to start on a big dream, and you can prove it! 

*Always refer to the franchises current FDD (Franchise Disclosure Document) on any franchise you are investigating.

Tree Service Business is The Perfect Low Investment Franchise For Beginners

A tree care or service business is an excellent opportunity for somebody looking for a low investment franchise. Once the first steps are taken, the results can be incredible, as a tree service franchise is the perfect low investment franchise for beginner entrepreneurs. Being a bit skilled in the technical aspects of tree care business might help you thrive, but all you truly need is the experience and the knowledge about managing a business, of any kind.

A local tree service business can grow large if its business plan is capable of serving multiple areas.

A tree service allows franchisees to enter the business at a smaller level and expand as the business grows. As a franchisee, you can offer:

  • Tree pruning and trimming
  • Stump grinding
  • Emergency services
  • Land and lot clearing
  • Plant healthcare
  • Tree removal
  • Maintenance of shrub

The Advantages of a Low Investment Franchise

The Advantages of a Low Investment or Low Cost Franchise

While low cost franchises do pose some risks compared to their pricier counterparts, they offer several other ones that are hard to ignore: versatility, accessibility, higher revenues, scalability, and resilience.

Since affordable franchises or low cost franchises are usually home-based companies and do not need plenty of resources, can have low startup costs, revenues can be generated quicker. Investing in a low cost franchise gives you a low-risk opportunity to grow.

Very Beginner Friendly

A franchise has a lot of advantages over starting your own business, especially when it comes to the established brand you’re joining, the knowhow, the standardized procedures, a brand customer’s trust, and other factors. But it can be just as much an investment as starting up your own business, although most franchises, in the end, can cost a bit less. Low investment franchises tend to be very beginner-friendly, which means that anyone willing to do it will most certainly succeed in the mission. It’s only a matter of doing things right and with assessment since the beginning. 

Little-to-None Employee Training Necessary

Once you manage to enter the franchise world, you may wonder, what about employees? Should I train them? The answer is no, as most franchises tend to provide training to all franchisee employees that come to be. As an investor in a franchise, you have the right to get all you need from the franchisor to start working. And compared to larger and more complex franchises, a low investment one like a tree service franchise requires training that is quick and simpler.

Wide Variety of Options

There is a wide variety of franchise opportunities and options so that anyone can start their franchise with an easy franchising process.  And low investment franchises and affordable franchises are usually from very diverse industries. They can be anything from a shoe store, property management, commercial cleaning, to a tree services, or even yoga classes. There are thousands to choose from in the United States, with more franchise opportunities than the more popular and established franchises that might generate a lot of revenue but small profit margins month to month.

Tree Service Franchise

The tree service industry is a highly profitable industry that sees large profit margins within several months or even weeks of being established.  Any tree service franchise is happy to provide a detailed description of their earnings and financial health through its Franchise Disclosure Document (FDD). Some of the best franchises even include the Financial Performance Representations report, which focuses on the detailed information from all franchise locations, the average, high, and even low performing franchise locations. (Read more about the advantages of owning a tree franchise here)

What Does a Monster Tree Service Franchise Cost*?  

  • Cash Required: $250,000
  • Net Worth Required:$500,000
  • Total Investment: $484,120 – $818.570 
  • Franchise Fee:$49,500
*Always see the updated FDD for current data

Easy to Finance And Run

Starting a business will require a lot of capital. But luckily, there are lots of business loan and financing options for hopeful franchise owners that are available in the market. A wide number of companies provide personalized funding options for their franchisees exclusively through agreements with particular investors or the procurement of capital directly from the company, which makes it one of the most successful means of funding a franchise.

You may not have to look for business loans or funding much more if you partner with a franchisor that has their funding program. After all, who knows the franchise business better than the franchisor? Affordable franchises and low investment franchises can be easy to finance and run if you give it a shot. 

What Costs to Expect

What Costs to Expect?

In franchising, you can spend a lot or a little, and still make money. Once you’ve decided that you want a franchised business, and what industry segment you’d like to work in (fast food, home repair, pet care, etc.), it’s time to determine what you can afford. Your “budget” will limit your choices.

Franchise Fee

Most franchise fees are between $20,000 and $50,000. In some cases, you may see franchise fees less than $20,000; these types of franchise opportunities are usually home-based or mobile franchises. The franchise fee usually covers the cost of training (not including travel expenses), plus support and site selection. The franchise fee, in conclusion, is the amount a potential franchisee pays to have the rights to a franchise location. 

How much does a franchise fee average?

Then, of course, the franchise fee is paid, which includes the one-time price of entry for the use of the franchisor’s name, operating system, continuous support for management, training, marketing, and much more. Franchise charges are typically between $20,000 and $30,000, although the higher-end and more popular brands can be as high as $100,000. When opened, ongoing royalty fees must be charged, typically from 4 to 8% of gross revenue, and includes a continuous assessment for an interactive marketing and advertising fund (around 2 to 4%).

Initial Investment

To become a franchisee, most franchise companies demand a new franchisee to pay a one-time franchise fee. This fee can vary from $10,000, to $15,000, or to over $100,000, occasionally. For a single unit, the average or standard initial franchise fee is approximately $20,000 to $50,000.

At the bottom end, you can reach a $10,000 or less into a home-based or mobile concept. Hotels, including the land, cost up to $5,000,000 at the high end. Restaurants are full-service, ranging from $750,000 to or over $3 million. Restaurants for fast meals have cost between $250,000 and $1 million. Fitness and repair facilities range from $200,000 to $300,000, while tree service franchises cost up to $100,000. Please note that these are typical spectrums, and the entry costs for a franchise business can differ greatly between brands.

Ongoing Investment

While the cost of entry to the franchise and the ongoing costs may seem substantial, starting your own company often costs money. One of the benefits of choosing a franchised company is that you join the launch and potential costs with your eyes wide open. Franchisors can provide you with a very exact image of the start-up cost, the on-going expenditures, and the reasonable estimation of when your sales are going to be positive.

After the fees and the monthly royalty fees, you will also be expected to cover the cost of buying or leasing equipment, retail space if needed, machinery, marketing materials, etc. Plus, you must have a minimum net worth and liquid capital on hand. 

Personal Finances  

Once you have read the literature, done your due diligence, considered the numbers, and know what to do when starting a business as a franchise, then you are safe to start your business journey. But first, you need to address one question before you sign on the dotted line: Where will you get the money for the franchise to finance?

When approaching a franchisor, the first thing that you want to do is assess what your net value is. Use a personal balance sheet to list both your assets and liabilities. To do this, please write down your balance sheets. List all your holdings, including the cash in hand, checking accounts, savings accounts, immovables (current market values), vehicles (whether or not paid off), shares, stocks, the premium cash value, and other assets.

Liabilities are the second part of the balance sheet. Please take the same measure. List your current bills, taxes, home mortgage, car loans, corporate finance, and so on. Subtract from your assets your liabilities, and then take a good look at your credit rating. All prospective lenders or franchisors search for three common elements in a loan rating: reliability, income, and track record.

Checking your finances is vital for beginners; do this process well, and everything that comes next will be ideal. 

Summarize 

If you want to start in the franchise world with a low investment franchise, then a tree service franchise can be a great choice. First, you should speak to an experienced franchising consultant in tree services, who will help you decide which tree service franchise is the right one for you and whether you have the experience or expertise to run a small business. 

You will then get in touch with a franchise and let them know you want to buy it. Afterward, you can ask for information about the franchise, including how much fees, premiums you have to pay, what you have to spend to open the site, and how much net worth is needed, as well as incurring in digital marketing issues. The franchisor will then accept you and help you set up a site as a potential franchisee.

Why a tree service franchise?

A tree service franchise offers franchise owners a lot of high-profit margins, and it does not suffer from any market saturation. It’s an almost $20 billion industry that has enormous opportunities for growth. It is still a highly specialized industry that not any landscaping entrepreneur can do without first approaching existing experts like tree service franchise consultants or franchisors. But once that barrier is crossed with basic training from a certified arborist working for the franchise, you become a leading tree service industry player in your local market. 

Starting a Franchise: All You Need To Know

Finding Your Franchise

Sometimes a firm wants to expand into new territories and markets, but it may not be able to do this without specific knowledge or capital. Franchising offers entrepreneurs a way to increase their understanding of the local market by helping locals in starting a business and join an already successful corporate model.

Like a new car or home, starting a franchise should not be taken lightly as a decision for where to invest. If you have no idea where to start, consider the tree service franchise world, an industry that’s gaining power in the market for its benefits. All you need to know on how to start a tree service franchise will be found in this essential guide.

Once you decide on buying or starting a tree franchise, gathering all the info you can get becomes an easier decision to make. You need to dig into the financial performance of the franchise’s locations already operating, your finances, how much can you expect to get back on your investment, the benefits the franchise offers—support, exclusive territory, discounts, help with training— and much more.

The best franchise review sites offer insight into the satisfaction of each franchisee, the performance, and the requirements and cost as well.

Finding out the happiness and engagement of your potential fellow franchisees, employees, candidates, and customers is also essential. You can start looking for the best tree service franchise today while paying attention to full transparency and all kinds of details needed to trust a franchisor and its franchise fully. To start a franchise on the right foot, pay extra attention to these next tips:

Do Your Research

Even before you start picking apart handfuls of franchise opportunities and their locations, you need to research the industry you’re interested in. Research how many companies and businesses are part of it, its worth, growth projections, the required investment, initial investment cost, and the skills to enter it.

For example, the tree service industry, which does not take much to be part of, will soon grow to $20 billion. Still, it requires investment in equipment, insurance for workers, and customer service, as well as higher interest from people in getting to know urban development and housing.

Part of what you can do when doing your research is:

Dig All The Dirt You Can

Digging for relevant information, bad reviews, and so on, will give you the confidence to make the right decision. Surf the web until you’re satisfied with the results, and if you found negative things about a franchise, then feel lucky about knowing and keep doing your research. You’ll find a trustworthy option if you do your due diligence. 

Talk To Other Franchisees

Most importantly, get the word straight from the horse’s mouth, or in this case, from the other franchisees. The right franchise will provide you with the Franchise Disclosure Document (FDD) with information about its other locations, but also with the contact information, so take advantage of that and talk to other franchisees. This document will help you contact them and request objective brand information.

Personal preferences

There will be some franchise salespersons who will talk down on you, and you have to stand up and say that you are a serious investor. Once you’ve decided against moving forward with the process of starting a franchise, then you must have your preferences and interests well placed, so it doesn’t turn out confusing for you. Have a general idea of what your business plan might look like, think about what you like and what you can do to make the area of expertise of your choice, a better place. Asking for references to people you know might also help you see things clearly about some franchise opportunities, so don’t hesitate to make all the phone calls and Google searches you find necessary.

Franchise costs

In America, franchising is another way of investing. It is not a passive investment, unlike stocks, and you can work hard to achieve better results than merely waiting for the market to turn the right way.

Reports from the International Franchise Union indicate that 4% of all small firms in the USA are franchises with revenue exceeding $2.1 trillion and employing up to 18 million Americans. In other words, franchising is a vital component of the US economy.

For starting a franchise, you will need an average of $250,00, even if you may have a franchise for tree services between $100,000 and $200,000, whereas franchising recipients pay average royalty fees of between 3% to 6% of gross monthly sales.

Internal rules and regulations

Getting to know the internal rules and regulations can be a bit overwhelming. Still, if you keep your eyes on the bigger picture, then all the details can appear as something understandable, and if you start with the basics, then what comes next can’t be as bad. Look out for these next terms and concepts when introducing yourself to the franchise environment.

1. Payment of fees

For the right to operate the business, franchisees pay regular prices to the franchisor. Franchise costs can be a flat amount, or a sales revenue percentage fee.

2. Operations

A big part of the franchising business model is the requirement to follow a particular set of operational directions in running the business.

3. Franchisor approved supplier list

Franchisors may allow franchisees to buy equipment from the list of “approved” suppliers that sell goods and products to meet company-wide requirements. Such approved supplier lists are generally included in the operations manual. If a franchisee buys from a supplier that’s not on the list, then the franchisor might issue a breach notice and penalize the franchisee or even null the contract.

4. Employment obligations

Franchisees hiring workers must comply with regulations on the workplace. Franchisor’s focus is on this.

5. Premises license and territory provisions

The franchise agreement also limits the operation of franchisors in a particular location or geographical area. For mobile franchises that routinely travel to service customers, this is especially important. Franchisees who accept jobs and represent candidates abroad will easily face notices of a breach.

6. Renewal provisions and transfer provisions

Typically, when the franchise agreement expires, franchisees must comply with the specific instructions of the franchisor. If the franchisee wishes to renew for a further period, it must fix any deficiencies and pay a maintenance fee. Franchisors will often be able to refuse to replace if the franchisee has not followed the provisions of the franchise agreement or if it wasn’t deemed like a good investment from the point of view of the franchisor.

7. Consequences of non-compliance

What happens when a franchisee fails to comply with one or more of the points above? Falling short of any rule of the franchise will generally give the franchisor a right to issue a franchisee with a breach notice. A breach notice is a formal notice to the franchisee that it has failed to comply with a requirement of the franchise agreement. 

 

Franchise Disclosure Statement/UFOC

The Franchise Disclosure Agreement (FDD) is a document that all franchisors must have and provide to prospective franchisees that want to make an informed decision about their new investment. It’s handed over to the potential franchisees at least 14 days before signing any franchise agreement (which also has to be handed over seven days before signing it). It has to be understandable, written in plain English, and with the terms and rights laid out. 

From the franchise fees, franchise profits, territory, and even the FPRs of existing franchise sites, everything must be in order.
The FDD also provides telephone names and contact information for all franchisees, which allows you to call and ask for accurate brand information.

Go Over Your Contract With a Legal Team

Go Over Your Contract With a Legal Team

This should be a natural choice before being involved in a new business or any type of business. Diving into the unknown is something we should never do alone, so if you’re new in the franchisee/franchise/ and franchisor world, then the company of a legal team that can guide you through it all will be ideal. But if you are wondering, why exactly do you need to hire and go over your contract with a legal team, here is why:

1. They know the priorities

Prospective franchise holders have to get the Franchise Disclosure Document (FDD) before they purchase the franchise that they want. A step that’s one of the top priorities, and when it comes to other steps to take, a legal team will undoubtedly know what the first things to address in these situations are.

2. They can advise you on choosing your business entity

A professional franchise lawyer may offer useful ideas on how to create a new business or franchise business. Is your company considered to be a limited liability company (LLC)? A Subchapter S Corporation? A C-Corporation? When you hire a legal team, they can solve all these questions.

3. They can help you if things go wrong

Nobody wants to fail in franchising. But what happens if unforeseen circumstances cause you to shut down the business?

Perhaps, the franchise you selected wasn’t a good fit for what you had in mind, or you didn’t make money fast enough. Also, maybe the location you chose wasn’t the right one; all these possible scenarios can happen, and only with a legal team behind you is that you will be able to turn the page and figuring out a way of fixing any issues.  

4. The franchise development director will try to convince you otherwise

If a franchise development manager ever asks you to not waste your money by hiring a franchise lawyer, only because the franchise agreement does not make it negotiable, don’t pay attention to it. Why? Because the real reason you hear such comments is due to the director’s convenience and their franchise growth, as they require you to sign the contract as soon as possible. 

 

Finance Your New Franchise

Franchise ownership is at first, all about getting the financing right, and there may be some obstacles you will have to overcome to have a bright franchise future. If you still have no idea how to start a franchise, then keep reading, as here are some of the options you have at your disposal when it comes to starting a new franchise and financing it.

 

Net Worth & Working Capital Requirements

For your tree service franchise, you’ll need a minimum amount of capital to start up or to take you seriously. You can be asked to have a minimum of $25,000 to $500,000 or more, although the average for a tree service franchise is more in the range of $100,000 to $200,000 recommended to start a franchise.

 

Choose The Best Funding For You

A franchise can be the ideal opportunity for anyone interested in becoming an entrepreneur. Experiencing both the versatility and freedom of owning a small business combined with the resources and services of a large company is something that will bring you so many benefits. 

Nonetheless, a substantial expenditure of capital is required to create a franchise, which often includes a high franchise fee and ongoing royalties and advertising costs. This form of cash is not available to everyone. Therefore, you might find it challenging to navigate among the various options you may encounter in case you need a business loan to fund your franchise investment. However, if you choose the right funding, all that comes your way during the process of buying a franchise and starting a franchise will turn out more than fine.

ROBS (Rollover for Business Startups)

A business startup rollover (ROBS) allows the company to invest retirement funds from a 401(k) or an individual retirement account (IRA without paying early retirement penalties or taxes). A ROBS is not a corporate loan or a401(k) loan, and no principal or interest payments are due. There is no debt.

Studies showed that ROBS owners also report higher success rates than those dependent on traditional corporate financing. A ROBS can be complicated, however, and it is necessary to consult a professional to find out whether a ROBS would work for your company. You can get a free no-community consultation from one of the leading ROBS providers in the industry if you have $50,000 or more in an IRA (An individual retirement account) or401(k).

SBA Loan

One of the popular options for aspiring franchisees is the SBA loan. In essence, SBA credit is loans backed by the US Small Business Administration and funded by its intermediary loan partners.

SBA loans are very similar to traditional banking, as SBA decreases borrowers’ liability by ensuring that the loan is partly covered; however, lenders are allowed to provide more low-interest rates loans and longer terms of repayment.

The SBA loan is one of the best options to fund a franchise, and you can apply if you can qualify thanks to a good credit score and financial history. Although you need to note that the requirements for qualifications can be strict, and the request process is a long one. It’s worth carefully considering your chances of being approved for an SBA loan before you spend significant time pursuing a financing option that may be unreachable for the current stage of your franchise.

Regular Bank Loan

A conventional term loan from a bank is a convenient way to fund your franchise. A term loan is what most people imagine when they think of a loan financing process. In this scheme, you are given a lump sum of cash, which you have to repay with interests over a set period.

Your lender will want to check your business plan and personal credit history when seeking a commercial bank loan to buy a franchise. These records are used by the lender to determine the loan interest. In essence, the bank is in charge of deciding whether you can legally approve your request to repay the loan and, thus, the probability of its money being returned.

Get The Loan From The Franchise Itself

If you need capital to buy a franchise, you must have a long chat with your prospective franchisor regarding your financing options. 

Most businesses with franchise business models provide custom funding options designed exclusively for franchisees, either in collaborations with different lenders or by directly capitalizing on the venture. Custom funding options is one of the most common ways of financing a franchise.

One advantage of the franchisor finance is that it is a one-stop-shop for all you need. Many of these schemes not only provide money for franchise fees but also for buying equipment and other services that the company needs to start up.

Also, you are likely not to have to look much further for funding if you work with a franchising agent who offers its financing program. Who knows the company better than the franchisor, after all? They know the risks, the ins, and outs of the company, better than any other borrower could ever take.

Establish Yourself

Establish Yourself

Evaluate your situation and how things are proceeding before you decide to invest, as establishing yourself should be one of the two priorities once you’ve done all the paperwork and paid the right financing. What comes next should be more natural than when you were just starting your franchise journey. 

In this process, you might learn some lessons that will take you where you want to be as a franchisee, and when you find your place in the business, then it will be the time of thinking ahead. Establishing yourself will require you to make intelligent decisions for your business—business plan or business model— such as hiring the right managers and employees once you are prepared to grow. It may take some time for you to trust your decisions, but do not allow any mistakes to stop you from growing in the market.

Buying a Franchise Vs. Leasing a Locale

Owning your small business franchise has advantages–such as a successfully developed business model, available resources, and stability. However, every small business owner still faces many stresses, even a franchisor and franchisee. One of those is the decision to buy or lease a location for the franchise. It doesn’t have to be stressful, so here are a few tips. 

The 504 loan from the Small Business Authority motivates franchisees to buy space, which has numerous advantages over leasing.

  • Leasing has lower upfront costs, but over time will cost much more
  • Monthly payments are often very close for rental and ownership
  • With ownership, you profit from the value of the building; your landlord takes advantage of the leasing
  • You can rent any unused space by owning your building, which reduces your occupancy expenses.
  • The wealth that you build from your property will make your pension a secure one.
  • You have tax benefits for owning your building

One of the essential advantages of having your locale is to ensure that your company has a safe place to be and that the cost won’t increase or fluctuate over time.

Train Your Employees

While initial training of the management staff at the franchisee’s headquarters or other training facilities can often be given by the franchisor, initial and ongoing training is generally provided directly by local or long-distance learning methods for the franchisor’s staff. The training provided by franchisors has many benefits, as franchisees meet many competing demands on time, and many may not be able to offer their workers high-quality one-on-one training.

The franchisor will provide business training and support for field workers who provide the training programs. You won’t have to worry about training employees yourself, as it is included in the contract most of the time.

Generate Some Buzz

You’re going to tank if nobody cares about you. Marketing and buzz generation are some of the toughest aspects of managing a business. To get you to the top, you need loyal customers. Generating buzz about your franchise is essential to put your business on the map.  

Buzz or word-of-mouth marketing is best described as “people talking about you.” Has a friend recently recommended a restaurant or a hairdresser or told you to watch a crazy YouTube video? Has a business connection suggested a new online service that will help you with accounting?

But what is “buzz” exactly?

The best description is “who is speaking about you,” and it is also called word of mouth marketing. It’s a recommendation from a family or friend; someone you trust. The same happens to a business partnership when it reaches a high level of popularity. You need to get your franchise in everyone’s mouth, and luckily for you, the right advertising and marketing might be included once you buy a franchise, or at least that’s the case in the most reliable tree service franchise companies.  Buzz is when people are talking about businesses or companies.

The magic of buzz can take place organically and lasts forever. Your work is done when people start speaking about you. 

Are you interested in a Tree Service Franchise? Go to the right place today and forge a new future in this business!  

The Advantages of Owning a Tree Service Franchise

A Tree Service Franchise provides you with a professional image through a nationally recognized brand within an industry that is not as widely known as others, making it the perfect option to thrive in the franchise business. A tree service franchise might be something you would not have thought even existed, but it does, and it does not take much to own one. Having this type of franchise is more than just trimming trees.

Like we’ve mentioned, it’s a relatively new market not many have heard of, so you have the chance of being part of an industry that is generating high income and growing. And you can do this by becoming a business owner or tree service franchise owner.

What Do You Need To Become A Franchise Owner?

What Do You Need To Become A Franchise Owner?

With a national brand image within an industry that is not as saturated as others, a Tree Service franchise offers a professional framework that makes it the ideal opportunity in which to succeed.. These franchises are more about handling people and staying calm, and working hard. Do your homework and you’ll be good, but if you don’t, you might miss on a lot of great opportunities the industry offers. 

Afterward, there are a few things to keep in mind and try to accomplish: 

  • Assess yourself
  • Consider costs
  • Speak with an Attorney
  • Share thoughts with franchisees
  • Be willing to work hard

It takes about 450 to 510 days (a year and a half) for a franchise to be truly up and running while paying your royalties. Then you’ll be a franchisor. 

Finances

Your financials will help you determine what kind of franchise is within your reach. Don’t overextend your finances just to get that big famous franchise you want. You might have to settle for something smaller but will, in the long run, be much easier to manage, and that means a better return of investment. As a franchisee, you’ll be paying the franchisor a percentage of your gross sales every month. (A low investment franchise can be easy to finance and run if you give it a shot.)

Industry Knowledge

It’s always preferable to have some sort of experience in the tree service or even landscaping industry, but it’s not a prerequisite. The primary skill any franchisor requires is proper management and experience with the local market, which is why companies are primarily interested in franchising.

Your personality will have to be one that helps you deal with customers but also with local and state bureaucracy, so patience is a must, as well as drive and even innovation. 

If you love the outdoors as well and not having to depend as much on technology and fads, then a tree service franchise is also for you. 

Legal Requirements

One of the first things you need to do after deciding to start on the road of a franchise, no matter what type, is to get a franchise attorney. Somebody to help you go over the legal details of any franchise contract or paperwork involved with starting a franchise. You need legal security for any big investment, especially for opening what is essentially a small business. 

In the U.S.and other nations, the word “franchise” has a particular legal meaning. In the U.S., the federal government defines a franchise as an enterprise relationship in FTC Rule 436, which has three definitions of factors:

  1. The use of a common name or mark 
  2. Significant operating control and substantial operating assistance 
  3. A required payment by a franchisee of more than $500 in the first six months of operation—including initial charges, royalties, publicity fees, training fees or equipment charges.

If the definitive elements of the franchise under the FTC rule form a business relationship, the franchisor must submit a Franchise Disclosure Document (or an FDD) to the prospective franchisee, which provides specific information to the franchisees in advance of selling a franchise. The sales process of the franchisor is also regulated by this rule, in addition to the obligations for disclosure.

Finding The Right Franchise For You 

How to know a franchise is just the right for you? Follow and resolve the next points:: 

  • Set your objectives
  • Identify specific options for franchise
  • Learn more about yourself first
  • Identify the processes thereof
  • Assess documents for franchise
  • Current franchise owners interview
  • Look forward to the day of discovery
  • Enforce the agreement on the franchise

 

Is Owning a Franchise the Right Move For You?

Owning a franchise is the right move as long as you choose the right franchise, and luckily for you, there are many ways you can be sure you made the right choice. One of the first things you should do before buying and owning a franchise, is to be careful with a franchise review websites, because they aren’t always truthful, or more specifically, aren’t giving you the whole picture. 

Is Owning a Franchise the Right Move For You? Discover Why It's Better To Buy and Own a Franchise

The main things to consider when looking for a franchise brand are: 

  • If the brand’s products or services go with your personality and goals. Managing a restaurant franchise is not the same as managing a tree service franchise, not in terms of sales, customer service, investment, and more. 
  • Your skills will also play an essential role in deciding which brand to choose from. Write down in a legal pad all your qualities and skills and maybe even what you want to learn from having a franchise. Don’t go chasing flashy brands, and always go with what you already decided after writing your pros and cons. 
  • Do your research. The franchise’s financial performance, which is available through its Franchise Disclosure Agreement (FDD), is going to be a critical deciding factor as well. That document has the phone numbers and contact info for all of the franchisees, so you can call them up and ask them for objective information about the brand.  
  • Just how much does a brand offer in terms of help starting up? Do they pay for your training? Uniforms? Do they take care of the marketing? Help you with your business loan? Just make sure you don’t go for the cheapest just for the sake of saving a few bucks. That might cost you more in the long run.  

 

Pros Of Being a Franchise Owner

Buying a franchise is buying a proven business concept and track record of success. Once you’ve picked the right tree service franchise, then you will start to enjoy all the pros or franchise advantages that come with buying a franchise (and there are plenty of Tree Service Franchises for sale), which are plenty. Here are the main benefits of owning a franchise and how you can gain profit from it.

1. Part of a growing industry of franchises 

Approximately 4% of the American small enterprises are franchises, generating over 2.1 trillion dollars in turnovers and employing 18 million Americans—The International Franchise Association reports. Franchising is simply one of the main components of the American economy.

The tree service market is around $17 billion, which is rewarding a lot of hard work and provides a wide array of opportunities. If you get a tree service franchise, you’ll require education and knowledge of the tree trimming business, although that is something any tree service franchisee will teach as part of any comprehensive training after buying. 

If you start a tree service franchise, you’ll be buying into a reliable and sustainable business model or franchise model without having a boring day at work, and with significant revenue. 

2. You are protected from competition in your territory 

When buying a tree franchise, you can be in more than one place. A lot of franchises even offer discounts for opening more than one location. Most franchises also offer exclusive rights to each location’s territory right. For example, the cost for a single location might be $49,500 for one and 200,000 population, but price usually reduces per location if buying 4 or multiple locations in an area with 800,000+ residents, and the. tree service will not place another location in that area that isn’t yours. Also, a tree service franchise will help you win the exclusive rights to provide residential, commercial, and government contracts.

3. A schedule of your own

Any suitable tree service franchise offers the opportunity to work outdoors in your working days. The tree services industry offers repetitive sales, large profit margins, scalable growth, and regular hours of business that will not represent a high demand for your time. Another plus is that the tree service industry does not have to compete with the internet, unlike, for example, the retail industry, and there are no automation and robotic dangers.

4. Training and marketing are taken care off

Any good tree service franchise offers comprehensive initial training for the franchisee and their team. The sessions conducted by professional staff include lessons on:

  • Safety and Equipment Usage
  • Public and Employee Relations
  • Budgeting and Business Planning
  • Supplies and Purchasing
  • Bookkeeping and Financial Controls
  • Advertising and Sales Strategies
  • Franchise Operations and Daily Management
  • Computer and Internet

When using the franchise business model, there are many cost advantages that you might not get as an individual business owner. The backing of brand name means you can benefit from its collective buying power, allowing you to acquire equipment and inventory at a lower cost. Also, Certified Arborists can show you how to provide estimates in hours, and some franchises can offer programs that help you get an edge over your local competition. 

Now, when it comes to marketing, it’s something that needs to go hand in hand with your initial franchise offering plans. You will be aided by the franchisor with ongoing support, branding material, marketing tools, and guidelines, so you can grow your franchise the best way. Marketing and advertising is something you don’t have to be stressed about once you start your franchise journey. 

5. Trusted brand in a growing industry

Some tree service franchises like Monster Tree Service has, within less than a decade, become the nation’s best-regarded, best-suited and best-known tree service franchise with good reason to call itself a regional brand of local experts. (Read our full Monster tree service review here)

By owning or starting a tree service franchise, you can listen to the local needs and apply national resources and experience to your community. 

As we said, the $17 billion industry in tree services is continuously growing. There’s plenty to make money. This type of successful business is essential and, above all, a highly repeat service offering tree and plant care for communities, houses, shops, and entire cities. The franchise will assist you in negotiating and signing contracts with local governments to ensure a stable revenue stream.

 

Cons Of Being a Franchise Owner

Pros and cons are part of every decision-making in life. However, the truth is, there are just a few cons regarding owning a franchise; compared to an independent business, for example. But still is essential you consider all sides of the situation, some of the disadvantages of owning a franchise are:

Fees: When paying a franchiser, there is a fee for buying the franchise or initial franchise fee and also ongoing fees. The entry fees are typically very high, as well as the costs for using the brand name that is set per month/year. 

No freedom: You have no freedom in a franchise system or franchise model to change the product line, or anything else. Owning a franchise is a strict process, and some rules must be followed to ensure that your franchise license is secured.

 

Have You Considered a Tree Service Franchise?

If you’re ready and set to invest in a tree service franchise, your next step is likely figuring out which one. Just like buying a new car or home, deciding where to invest should not be taken lightly. 

We can help you look for the best tree service franchise, with full transparency and an explanation of what to do to make it thrive. 

Want to find the perfect tree service franchise for you? Stop looking in all the wrong places and start owning a franchise from the most reliable tree service company near you, so you can start building a better future for you, your family, and your finances!

A Guide to Buying a Franchise

Coming from a corporate job to know taking a change no franchising, it can be challenging to know what to look for when you are on the lookout for a tree service franchise to purchase. It’ll always be a significant investment, and you should take the time to think about it. Whether you want to get a large or a small one, two of the most important things to know before buying a franchise are the requirements and benefits, which you’ll learn with this essential guide.

First of all, think about your personality and talents, and ask yourself questions such as “Why should I want a franchise?”, “Will I be a good manager? “Am I patient?” To make this a more natural process, you can write down your franchise objectives on a legal pad to help you determine which franchise category to buy into, so it can help you connect the dots and have a more precise goal in your head. 

To get started on the legal and bureaucratic paperwork after you decide, you can seek the help of a franchise lawyer to clarify the law and legal aspects of the process and who can register you with your state or local franchise regulator. Hiring a franchise lawyer is secure and will help you more than you can imagine. 

  • What is a franchisor

The owner of the brand or franchise that you will be participating in. 

  • What is a franchisee

The person who opens one or several new locations of the franchise on behalf of the franchisor. 

As a franchisor starting a new franchise, you get many advantages to just expanding on your own; it takes less capital, less risk, and takes up less of your time as well. You gain partners when franchising, but you are still the owner of the brand and parent company. 

And as a franchisee (who buys the franchise) you get to join in a successful business without the hassle of starting from scratch and creating processes and branding by yourself. Ponder on all the benefits of owning a franchise and organize yourself to make it happen, so you won’t have to struggle by not knowing the basics of it.

Next are all the elements to consider when buying a franchise: 

 

The Pros of Buying a Franchise

Good Statistics

The numbers in the world of franchising are thrilling, according to the International Franchise Association, with 4% of American enterprises being franchises, and they generate over 2.1 trillion dollars in revenue while employing 18 million Americans. This means that franchising is one of the main components of the American economy and that the advantages of franchise ownership are considerable, or at least more than you might think. 

The tree service industry, for example, has been valued recently at $17 billion, which is a guarantee that when purchasing a franchise in the tree service industry, you’ll be buying a reliable and sustainable business model with high revenue. When choosing to invest in a tree service franchise, you can do so without prior experience in it, as work-ethic is what you need the most. 

Cover Multiple Territories

When buying a tree franchise, you can be in more than one place. A lot of franchises even offer discounts for opening more than one location. Most franchises also offer exclusive rights to each location’s territory right. This means that the tree service will not place another location in that area. Also, a tree service franchise will help you win the exclusive rights to provide residential, commercial, and government contracts.

Instant Brand Recognition

Some brands, services, or franchises, can become the nation’s best-regarded within less than a decade because you can see it as a regional brand of local experts. By owning a tree franchise, local needs can be met, and the community can grow more than expected. You can join your efforts with the franchise to assist you in negotiating and signing contracts with local governments so that you can ensure a stable income. 

Just how much does a brand offer in terms of help starting up? Do they pay for your training? Uniforms? Do they take care of the marketing? Help you with your business loan? Find the franchise that helps with all of this, and make sure you don’t go for the cheapest just for the sake of saving a few bucks. That might cost you more in the long run.   

Skip the Start-up Phase

Setting up your own company tends to be a slow process, one that doesn’t assure you success, because there’s a lot at stake, but when buying a franchise, you can skip this part, as it’s ready for the taking. Most of the cost for opening a tree service franchise is, like any other franchise, first the start-up cost, which includes everything from fees to royalties, buying or leasing real estate, and training your new employees. 

Easy-to-Replicate Training System

Any good tree service franchise offers comprehensive initial training for the franchisee and their team. Some offer two full weeks of initial training, with one week of classroom and hands-on training followed by another full week of personal, onsite training at your location. These two weeks don’t have to run together, and the sessions conducted by professional staff include lessons on:

  • Safety and Equipment Usage
  • Public and Employee Relations
  • Budgeting and Business Planning
  • Supplies and Purchasing
  • Bookkeeping and Financial Controls
  • Advertising and Sales Strategies
  • Operations and Daily Management
  • Computer and Internet

Also, Certified Arborists can show you how to provide estimates in hours, and some franchises can offer programs that help you get an edge over your local competition. 

In conclusion, the training for employees is part of a proven system for making money, and you and your professional staff can learn it. 

If you and your team still have any doubts, don’t worry, as ongoing support on training is usually given to people at least every month by the franchise. 

Marketing and Advertising Help  

Your marketing needs to go hand in hand with your initial franchise offering plans. Not all marketing works everywhere, every time or in any way. Nonetheless, you will be aided by the franchisor with branding material, marketing tools, guidelines, and other resources. You as a franchisee will also need to work alongside your new franchisor to teach them about the local market. 

More Access To Financing

It depends on the franchisor, but a lot of franchisors work closely with both national and local financiers that will help you gain access to the necessary capital you might need to set up your new location. Once you also enter into an agreement with the franchisor, you can gain access to the Small Business Administration’s (SBA) loan plans, or even be taken seriously by your local bank for a small business loan. Look also for franchise review sites in order to compare. 

Consider a Tree Service Franchise!

If you’re ready and set to invest in a tree service franchise, your next step is likely figuring out which one. Just like buying a new car or home, deciding where to invest should not be taken lightly. 

For this, you’re going to need all the info you can get, and that includes the financial performance of the franchise’s locations that are already operating. Another essential part of this process will be your financials, how much can you expect to get back on your investment, the benefits the franchise offers (like exclusive territory, discounts, help with training), and other resources. 

Look also for franchise review sites in order to compare. The best franchise review sites offer insight into the satisfaction of each franchisee—the performance, and the requirements and cost as well—satisfaction and engagement of your franchisees, employees, candidates, and customers. We can help you look for the best tree service franchise, with full transparency and an explanation of what to do to make it thrive.

Need Information To Buy a Franchise? These Are The Financing Tips For The Entrepeneur

Things You Need When You Buy A Franchise

The cost of opening a Tree Service Franchise varies depending on the number of locations you want to operate and how much you need to invest in setting up each area. Some of the details are:

  • Franchise fees for one territory. 
  • Fee for a royalty on monthly profits.
  • Other amounts of liquid capital (cash on hand).
  • Some net worth. 

Usually, the tree service franchise fee is about $40,000 to $60,000 for a single region. You get your exclusive territory, with a population of at least 200,000, with significant discounts.

It takes as little as 3 to 6 months for a franchise to be up and running while paying your royalties. 

That might sound like a lot of time, but it is about the same as starting a new business. And it comes at a lesser human and financial cost as well, for both the franchisee and franchisor. 

Dig All The Dirt You Can On The Franchise

Digging for relevant information, bad reviews, and so on, will give you the confidence to make the right decision. Surf the web until you’re satisfied with the results, and if you found negative things about a franchise, then feel lucky about knowing and keep doing your research. You’ll find a trustworthy option if you do your due diligence. 

Talk To Other Franchisees

Most importantly, get the word straight from the horse’s mouth, or in this case, from the other franchisees. A good franchise will provide you with the Franchise Disclosure Document (FDD) with information about its other locations, but also with the contact information, so take advantage of that and talk to other franchisees. This document will help you to contact them and request objective brand information.

Master of Your Finances

Your finances will help you determine what kind of franchise is within your control. Don’t overstretch your finances just to get the big, popular franchise everybody wants. You might have to settle for something more manageable like a tree service franchise smaller, but in the long run, it will be much easier to manage, and that means a better return on investment. You have options when it comes to controlling your finances and getting the access that you need.  

Even if the franchise fees (money they pay to buy the right to a franchisee) are a certain amount, all franchisees must be mindful of their finances, that you have sufficient capital to support the overall cost of setting up a new franchise site. You will also be asked by the franchise for a minimum net value (what the total wealth is).

You’ll need an average of $100,000 liquid cash to start a franchise, although a tree service franchise might ask you between $100,000 and $400,000. This can very greatly based on such items as equipment, territory size, employees hired. The average royalty fees paid by franchisees can also range from 4% to 12% of monthly gross sales.

Research The Industry You Are Entering

Even before you start picking apart each franchise and their locations, you have to research the industry you’re interested in. Research how many companies and businesses are part of it, it’s worth, growth projections, the needed investment, and the skills to enter it. 

The tree service industry, for example, is expected to grow to a $20 billion one soon, it doesn’t take that much previous experience to enter it, but it does require some investment in equipment and good customer service and even interest in knowing more about urban development and housing. 

It’s things like that you should be prepared for. 

Consider Your Location

Your first franchise location will have to rely on people you already know in an area near your original one, and rely on customers who know the brand you are buying well and want more of it. That new franchise location is going to reel new customers, and then you’ll expand once more, with new franchisees, new market segments, new geographic areas, and more revenue and earnings.

Information For Entrepeneurs Looking to Buy A Franchise Business

Things To Watch Out For

 

Your Contractual Agreements

You need to be careful in the making of a contractual agreement, and pay extra attention to all the details, so you won’t end up losing more than you’re gaining. This happens after a franchisor is sure you’re the new franchisee that will help them expand the company, and so you will be offered a contract explaining the obligations of both parties. Its important that you know and understand everything that’s written in the Franchise Disclosure Document that will be sent to you; since this is information that The Federal Trade Commission (FTC; the country’s consumer protection agency) feels imperative that you should. That being said, FDDs are usually 150 to 200 pages long and it definitely poses some difficulties getting through it on your own. Make sure you have a franchise attorney at hand and ready to review the contract.

As most guides will tell you, seeking help from a franchise lawyer is the best course of action. Their expertise in federal law and franchising can not only help you understand the FDD in its entirety but can also help you negotiate changes or point out any red flags before you buy into a franchise. There will be plenty of time to do so since, the franchisor is required to give you the contract with enough time in advance for you to look over it and negotiate even aspects of it. 

Franchise Royalty Payments

By owning a franchise, you’re helping a company that is already popular grow. But to make a profit from the success of somebody else’s company, you must pay an entrance fee, and you have to do some work if you want to make money out of the market and share your winnings, i.e., pay royalties. 

Paying Your Fees

You have to pay a franchise fee to be part of a successful franchise company, and for this, you will have to pay a fee to any franchisor when you get a tree service franchise—price ranging between $30,000 and $50,000. Although this does not include other expenses, such as inventory, labor, preparation, etc. 

Franchise Royalties

Also, you still have to pay royalties to the franchise —mostly every month— once you have paid a fee for having the rights to a tree service franchise and being part of the brand. How much you pay depends on the franchise, but generally is of 4% to 12% of the monthly income, which will also depend on the industry you’re willing to invest.

Other Fees and Discounts

Most franchisees will need you to pay a monthly marketing fee, but it can vary according to the franchise type. Some may even have discounts on whether you are a migrant, a veteran, a female, or if you pay royalties early, before time, or if they want to expand into your market, and provide additional incentives.

Most franchises also have exclusivity and secured territories, which ensures that they will value your land without offering their franchise in your area to anyone else.

The Burden of Sharing a Reputation

When buying a franchise, reputation is everything, as you have to protect the name of the company and your acquisition. If there is something you should watch out for, then that is the burden of sharing a reputation that goes with your work-ethics so that you can provide your franchise and the community an excellent service. 

The Qualification Requirements

As with most things in business, qualification requirements are needed, and here we are going to explain to you some of the elements you have to consider during the process of buying a franchise.  

Purchasing Required Assets

A franchisor tends to demand you have some net value of assets to your name, which is another way that a franchisor can decide whether to do business with you or not—your products, liquidity, inventory, etc. The net value requirement can sometimes be as high as the start-up costs. In a tree service franchise, a net worth of $350,000 is typically required.

Liquid Assets

The cash on hand or the money you are prepared to invest in the company is called equity or liquid assets. As if a landlord were requesting income proof and a deposit plus the first month’s rental for potential tenants. A tree service franchise could ask for liquid assets of at least $100,000.

Skills & Experience

Of course, net worth and wealth is also a sign of excellent financial governance skills and expertise. Still, every franchisor is primarily interested in the excellent management of a potential franchisee, followed by local market knowledge, which is why companies want franchising in the first place.

Note also that the franchisee’s not only telling others about their background in the tree service business but also learning from the franchisor. The franchisor could also benefit from an experience in creativity and risk-taking.

Credit score 

To cover certain expenses, including maintenance, equipment, training, etc., you need to qualify or show that you can be eligible for lending and credit lines. Without being even a nominee for a franchise, a good credit score is a must. You can also support the franchisor by approaching local lenders, or you can ask the Small Business Administration to help you apply for a franchise loan from banks or other lending institutions. Learn more about it here. Having partners is always a good option if you don’t want to take all the risk yourself.

Net worth

In addition to cash on hand or assets, a franchise usually asks you for minimum net value (total wealth to your name). For example, a tree service franchise typically demands anywhere in net-worth from $250,000 to $500,000.

Net value is another way a franchisor can choose to do business with you—money, liquidity, inventory, etc. Your net worth for a tree service franchise will, on average, be around $350,000.

Cash on hand

For any franchise, most franchisors require a minimum amount of capital to start up or to take you seriously. They will check the liquidity, which is the cash on hand, or the money you have to invest. Like when a landlord is asking prospective tenants for proof of income. The average liquid capital a tree service franchise requires is around $100,000. 

Outside income

It will always be of great help that you have an additional source of revenue outside the franchise, as it will give you the chance to prevent any situation that may hinder your progress as a franchisee. 

Industry experience

It’s always preferable to have some sort of experience in the tree service or even landscaping industry, but it’s not a prerequisite. The main skill any franchisor requires is good management and experience with the local market, which is why companies are primarily interested in franchising.

However, note that the franchisor’s expertise is not only in the Tree Service franchise business but also in the franchise company. The franchisor could therefore also have an ability to innovate and take risks.

Workforce & Labor

You have to hire, train, and maintain your labor force. You’ll be in charge of payroll, severances, legal expenses, everything (unless the franchise specifies they will handle your salaries). 

Supplies

Buying a franchise will require you to comply with their supply rules. Most do require you buy from specific suppliers or contractors. If you are offered more freedom in choosing suppliers that sell the good or product you need, you still have to abide by strict requirements, like maybe buying only electric vehicles, organic ingredients, or American made products. 

Some franchises, like a tree service franchise, have their marketing programs where you can easily buy signage, print ads, direct mail, videos, business cards, and other marketing materials without going out and searching on your own. 

Administrative Legal & Accounting

A good franchisor is always well protected against the risks of trusting someone else with their franchise. They will go through with the legal requirements before you even start, and also be protected against any mistakes you make. You will incur the cost of signing the contract (unless otherwise stated by the franchisor) and other necessary legal fees for opening the business in your city or state. If you get a franchise attorney (which is recommended), you will also incur this cost by yourself. The typical price for a franchise attorney is between $1,500 to $5,000. 

Taxes

Do franchises even pay their taxes? Yes, like any small to medium size business, they have to pay local and state taxes. As a franchise owner, you are merely paying for the right to use the brand, along with the know-how of another established business. However, you are still a business with legal rights and responsibilities. 

Management experience   

If the brand’s products or services go with your own personality and goals, go for it. Managing a restaurant franchise is not the same as managing a tree service franchise, not in terms of sales, customer service, investment, and more.    

It’s going to be hard to convince a tree service franchise to take a risk with you if you don’t have any experience or proven skills with business management, either as an employee, supervisor, or owner of a previous business. Having the required capital and net worth won’t be enough if you’ve never proven to be a good manager or part of another small business in any way. A degree in business management certainly helps, but proven real-world experience is even better. 

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