Without going into to much detail, or openly plugging our service, I was wondering if you could give me an idea on what YOU would consider to be a fair price to purchase a franchise of a company based on the following info
The reason for this question is that I am interested in what you think would be fair
Your estimated turnover would be £75K in the first year
Your turnover is estimated to be 100K + in year 2
Clear profit would be 70% of turnover
All equipment, training, support etc is included in the franchise package and no experience in this field is needed as the 3 week residential course covers everything you would need to know, you would definitely need inteligence and aptitude to learn and the willingness to work hard
So what would you think that this franchise would be worth to YOU to purchase if YOU were looking ?
This is not pie in the sky income and definately not a boring franchise, we will be launching our franchise network in the new year, the figures quoted are achievable with what I call normal levels of work, in fact they are based on what we have achieved from zero and calculated as such, so if i can do it working from nothing someone else should be able to
YOU can help me with your ideas on what is good value
I am not interested in what other franchises with similar earnings cost, I am interested in what you consider fair, hopefully that information will help me to cost the offer later next year
Hi everyone
I am new here and I hope this forum will be a good one for me
Now before I start I will say that I am looking at franchising a business, and I hope that this post doesn't break any forum rules, if it does I apologise and will remove it is the owner of the site asks me, but I am after information, not plugging my business, when it comes to that stage I will be looking at paying for all the advertising I can get to build the network rapidly
Despite looking at other franchise offerings I am having a problem actually placing a cash value on what a franchise is worth, I hope that you could help me here, some seem to offer little other than their trading name and charge huge amounts, others offer what seems exceptional value and great ideas
Hi Archer
Many thanks for posting and nope, not breaking any forum rules. Advertising is OK here too so long as it is in the way of something informative, however this post was not in the realm of advertising!
Costs: Your post asked for honest opinions so here is mine.
I believe a franchisor should not make any profit from the sale of their franchise. (not the case with many franchises) The franchise fee in my opinion should cover all the equipment, time, training etc taken to set up the new franchisee with their business and the only money above and beyond cost price should be a % to put towards national and local advertising campaigns taken out by the franchisor.
It really depends a lot on how the franchise works, many franchises make their money from ongoing fees / % of profits etc but some simply make money on franchise sales. If yours makes money from ongoing fees etc then I would not be looking to make any profit from the cost of your franchise but there is nothing wrong with adding a good 10-20% for ongoing marketing.
In America many franchises make a loss on their franchise sales, their method seems to me at times to be very true to the essence of franchising in that they want to expand their brand through selling franchises and make their profits from A LOT of franchisees paying a % of profits to the franchisor. Many pay out up to 50% of the franchise fee to agencies that place franchisees with them, in turn making a huge loss on their franchise sales but lets compare that scenario to the mobile phone market The mobile phone companies are happy to give away laptops, phones, free minutes, free months, FREE ANYTHING to get you to sign up with them on long contracts because they know that in the long run anything free will be paid back ten fold over the years and because people generally do not change providers. The same can be applied to franchising. Make your losses on the sale, or sell at cost price, and reap the benefits over the years from your franchisee base which pays you monthly slices of their earnings.
So, in summary and in my opinion. Franchises should sell at cost price or below, take a slice of monthly earnings and add an initial fee on for marketing as well as an ongoing marketing fee each month.
p.s. you would have been better off posting this in the Ask the Experts category. if you want me to move it please let me know.
Kind regards,
Matthew Anderson
The Franchise Shop