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morefreedom

PARKED
Feb 22, 2008
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Hi Community,

I am new to this forum. Nice meeting you all.

Got a question for you guys. I have been working with the family business for several years, and the business goes better and better. The family wants me to take over the business and be the future leadership of the company.

My quesiton here is I would only want to maintain it the current way, but build the assets portfolio for the company, so I thought of buying some franchises.

I heard that the parent company of the franchise will buy back your franchise when you do not make money with the their franchise? Is that true? I am about to do some reasearch here.

I was thinking if the parent money will buy it back when we do not make money, then doesn't that mean I got my risks covered?

Any advice guys? I highly appreicate your advices..
 

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CarrieW

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I would imagine that its different for each franchise business. my husband and I looked into the rhino liner franchises and as far as I know there was no such buy back policy.

from the process we went through with rhino liners they do a bunch of research to make sure that you can market the product in the area your planning on opening in before they would allow you to purchase.

Id be very interested to know if anyone knows if this is indeed true for some of the franchises.
 

Z5 FILMS

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Aug 13, 2007
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I'm no expert, but I think I have read hundreds of articles about franchises before. Not once have I ever read about a buyback plan. That sounds like a lot of cost for a franchise to eat. And an unnecessary one.

Does not mean it's not true. But I would doubt it for most franchises.
 

yveskleinsky

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Jul 26, 2007
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++rep Hoops. We have covered the topic of franchising before on this forum, and while there is money to be made in them, you are still working in someone else's plan.

Like Hoops said, if your own business is going so well, have you thought of franchising it?
 

MJ DeMarco

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More clarification is needed ... are you a franchisee and looking to buy additional units thru the franchisor? Or are you a mom-n-pop looking to diversify thru buying a franchise?
 

Allthingznew

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Aug 26, 2007
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I know of Jack in the Box restaurants that were franchised, but are now company again. I don't know the details, but I think it was more of the company buying out the franchisee to protect their reputation. And/or when the franchisee wants to sell, the company may not let them sell directly to another person. Either way, not a safety net, at least not for the franchisee.
 

White8

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Dec 6, 2007
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I know of one company that "took over" a pair of poorly performing franchises but the franchisee didn't tell me if he was bought out or just surrendered them to stop the hemorrhaging.

Somethings that would be a big questions for me would be the length of term, the renewal terms, and operational requirements of a franchise. I have not owned or even looked at a franchise but was a John Deere dealer which would be similar. Their dealer contract, as well as those of similar manufacturers, was written so in the favor of the manufacturer that they could literally walk into your business and tell you to pack up the product and you were no longer a dealer for any reason they chose.
 

kurtyordy

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Aug 28, 2007
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I have heard of franchises buying out well performing units because they want the location now that it has proven so lucrative.
 

hakrjak

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Buying underperforming franchises from absentee owners and the like might be a great business model to pursue.

I know that all the research I have done on Franchises to date has brought me to one conclusion:

When you buy a franchise, you aren't buying a business -- you're buying a job. Unless you can afford to buy several and hire a qualified manager (And make good profit on top of those extra costs) -- then you'll be a slave to your new job... Maybe in an industry you never saw yourself working (Like food service... yuck)

Cheers,

- Hakrjak:bgh:
 

PurEnergy

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Jan 4, 2008
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Too many franchisors are in it for the upfront fee or territory fee. Many could care less if you fail or succeed because they got what they wanted when they made the initial sale. It will be in an agreement between you and the franchisor as to what will happen if you are underperforming. That agreement will be highly in favor of the franchisor guaranteed and more than likely they will not buy back anything. As a matter of fact if you are underporforming they will more than likely TAKE your business away from you and resell it to the next guy who didn't do his homework.
 

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Allthingznew

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In addition, often a franchise agreement is set for a predetermine length, like 20 years, and can be renewed, or not, like a rental agreement.
 

MJ DeMarco

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I have some friends that own multiple franchises and are absentee, for the most part, in ownership. It really all depends on the franchise. Obviously, the opportunity to a McDonalds or a Dunkin Donuts is a lot different than owning a Quiznos.
 

CarrieW

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when I worked at mcdonalds the 1 owner had 4 stores. they did everything by the book.(mcdonalds book)
not all mcd's do this.(ive worked for 2) we had to go thru training on every aspect of the job and pass tests proving we could master each job before we were allowed to be scheduled on them.

we saw mr anderson about once a year! his mcd's were so good they were apart of the pilot programs mcd's tests out before they put them in all stores.(we had a frequent customer card, first to get the auto fry cookers and the auto drink makers)

His store that I worked at was in one of the best locations Ive ever seen! the store I worked in was on a major highway where I-95 and the pa turnpike exited too. on the weekends we would have 8-10hr long rushes. non stop customers, drive thru line wrapped around the building with no breaks all day!

when I worked at mcd's(both) we never saw the owners. ever. the second one I worked for the guy owned several as well. they both had good managers in place and were 100% hands off.

so far Ive never seen a franchise owner who owned a job. the only ones Ive ever worked for were the ones who had their shit together and the owners were 100% hands off.
 

WheelsRCool

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Aug 12, 2007
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There is a tremendous amount of information out there these days regarding franchising, for both franchisees and franchisors now.

If you are a prospective franchisor, you will often read stuff talking about how "today's franchisees are more educated and knowledgeable than ever," and so forth, because there are lots of books out there on how to buy a franchise and become a franchisee.

I would suggest, if you are interested in becoming a franchisee, that you get a few good books (check Amazon for reviews) and read them, you will know a lot more.

Good luck!
 

randallg99

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Aug 9, 2007
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the best education I received was visiting franchise sites and meeting with franchisors at their `discovery` exhibitions (or whatever they call them) and being able to drill them with questions. I prefer talking with existing owners to get their perspectives and then visit onsite locations and just chat with workers... it doesnt take much more than just a few minutes to get a real good idea of how well their system works.

2 things keep me from opening franchises-

1. they will not undertake the risk with me. If that changes, maybe they will accept my offers.

2. some franchises charge an awful lot of royalty, and probably unfairly... the royalties can amount higher than profits

R
 

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