There are many reasons why you want to invest in a franchise. Maybe you want to be your own boss. Maybe you want to get involved in a particular industry. And everyone with an entrepreneurial spirit wants to make money. But how do you predict profitability before you buy into a franchise system? There are six things you can examine that will help forecast financial success.
Focus on the Financials
Franchisors have financial reports on hand and available to potential franchisees. If you haven’t been offered the reports, request to see them. The Federal Trade Commission (FTC) requires all franchisors to provide prospective franchisees with an updated Franchise Disclosure Document (FDD). All FDDs must include estimated initial investment costs, as well as recurring costs. Some FDDs may also include revenue projections.
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No one knows better about what to expect in terms of profits than other franchisees. Talk to other franchisees to get a gauge on what your first year in business will look like. When will you be profitable? When will you break even? What costs can you expect to incur when you first open your doors? The more you can explore other owners’ financials, the better you can predict your own.
Examine the Economy
Consider the economic situation for your buyers before starting your franchise. If you’re considering starting a franchise that sells high-end products, but consumers are tight-fisted about where they’re spending money, it might not be the right time to open your doors.
While most of us would love to open a business that revolves around something we are passionate about, it doesn’t always make for a profitable business. Do research on the industries that have strong and steady growth. Healthcare is a good example of an industry experiencing a rise in demand year over year.
Ongoing growth in the number of franchise units shows that a brand is thriving. One key benefit of buying a franchise compared to starting your own business as an independent operator is the franchisor’s name and brand recognition — and the more units that are open, the more brand awareness consumers have.
In addition to being financially viable, your franchise needs to survive. Look for franchises that have been in business for a decade or more or have tremendous growth potential. Your objective is to be a business owner and achieve long-term financial security, so a highly-trendy franchise or one that is very seasonal may be challenging if you’re looking for long-term success.
If you are looking for a franchise that hits on all of the points listed above, consider American Family Care (AFC). AFC is the original urgent care franchise, and its founder, Dr. Bruce Irwin, is an industry pioneer. After more than four decades in franchising, AFC operates more than 220 clinics with 600 in-network physicians caring for nearly 3 million patients a year. AFC is the nation’s leading provider of urgent care, accessible primary care, and occupational medicine. Ranked by Inc. magazine as one of the fastest-growing companies in the United States, AFC’s stated mission is to provide the best healthcare possible, in a kind and caring environment, while respecting the rights of all patients, in an economical manner, at times and locations convenient to the patient.
Click here to learn more about urgent care franchise opportunities with American Family Care or request more information.