Frequently Asked Questions for Franchising
Written by: Patrick Findaro
Last Updated: August 15, 2023Free Download Our Exclusive E2 Visa Business Guide
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At Visa Franchise have helped numerous clients from countries all around the world find and analyze the best franchise investments for them and their families. We often receive similar questions in our initial and ongoing conversations with clients. Based on these questions, we’ve created Frequently Asked Questions for Franchising:
1) What Is Franchising?
Franchising is a method of distributing products or services. Each franchise system typically includes the franchisor. He lends the brand and business system; and the franchisee, who pays a royalty and often an initial franchise fee for the right to do business under the franchisor’s name and system.
2) Can I Invest In A Franchise That Is Well Known In My Home Country?
Foreign franchises can be quite successful in the U.S. But generally after several adjustments to their business model. We prefer to work with foreign franchisor brands that have at least a few units operating in the U.S. and a track record of success.
3) What Are The Major Growth Industries In Franchising?
Industries in franchising that are expected to continue to experience rapid growth for the coming years are largely in the service-related fields such as:
- Healthy Fast Casual/Quick Service
- Health and Beauty
- Pet Care
- Commercial Cleaning Services
- Property Management
- Fitness
- various industries
There are many opportunities across specific sub-segments of industries like quick-service restaurants as well.
Industry growth is a key part to understand before investing in a franchise, however, it is key to also investigate an individual franchise company’s track record.
4) What Should I Consider Before Buying A Franchise?
Among the points which the International Franchise Association (IFA) recommends for investigation include:
- The type of experience required in the franchised business;
- A complete understanding of the business;
- The hours and personal commitment necessary to run the business;
- Who the franchisor is, what its track record has been, and the business experience of its officers and directors;
- How other franchisees in the same system are doing;
- If there are any products or services you must buy from the franchisor and how and by whom they are supplied;
- How much you’re going to pay for the continuing right to operate the business;
- How much it’s going to cost to get into the franchise;
- The terms and conditions under which the franchise relationship can be terminated or renewed, and how many franchisees have left the system during the past few years;
- The financial condition of the franchisor and its system.
5) How Much Capital Is Needed To Buy A Franchise?
Investment requirements range greatly depending on the franchise, location, and industry. Total start-up costs (including the franchise fee and working capital) can range from $20,000 to over $1,000,000, depending on the franchise selected.
6) Am I Able To Negotiate The Terms Of The Franchise Agreement?
For 99% of franchises, the franchise fee, ad-fund, and royalties are non-negotiable. Even for investments in multiple units, there are usually prearranged discounts on the franchise fee. Other minor terms might be negotiated with the help of a qualified franchise attorney.
7) There Is A Lot Of Free Information On Many Franchises Found On The Internet, Why Should I Engage Visa Franchise’s Services?
Visa Franchise has spent a few years analyzing and reviewing countless franchises on behalf of our clients. This has enabled us to find the best opportunities that are available to foreign nationals and have territory availability throughout the United States.
We have reviewed over 700 businesses and only about 50 have passed our stringent criteria to be offered to clients.
There are other franchise consultant sites, which publish the 500-600 franchises that they work with. Regularly, we review their portfolio and might only overlap on 5-7 franchises from their entire 500+ franchise list. There are many franchises but they are not all created equal.
8) What Are The Risks Of Starting My Own Business? Why Should I Trust In A Franchise?
Starting your own business in the United States is possible. But very difficult. There are numerous obstacles that foreign national faces with starting their own business. More information can be found here
Visa Franchise does research and analysis of franchise investments continuously. So far we have analyzed more than 700 franchises, yet we are only working with roughly 50 that we are comfortable presenting to clients. The criteria we usewith the support of the franchisors decrease the risk for our clients.
9) What Are The Benefits I Receive From Investing In A Franchise, Paying The Franchise Fee, And Partaking In Ongoing Royalties?
The cost associated with franchising enables the franchisee to receive all the support and benefits of the franchise. These benefits include site selections, development support, training, marketing, and ongoing operational support. Additionally, the cost allows the franchisee the right to use a brand with a well-established business model and name.
10) Do You Work With Global Franchises Such As Burger King, Starbucks, And Dunkin Donuts?
We do have relations with several global franchise brands with units around the world. However, the bigger and more established brands typically require a minimum development of three or more units which raises the investment value to well over $1,000,000.
Also, brands like Dunkin Donuts, do not accept investors that do not already have a green card or citizenship. As for Starbucks, it is not a franchisor within the United States.
11) I Would Like A Salary Of $5000 Or $6000 A Month. How Much Should I Invest? And, After How Long Will I Get My Investment Back?
A great question that we receive all the time. That answer depends on a variety of factors. E.g. location, industry, how many hours you are willing to work, and if your spouse works with you.
The variability of factors is too high for us to give a concrete answer. We generally don’t recommend franchises that would have net profits of less than $5,000 for an owner-operator.
12) I’m A Bit Lost, What Are Ad-Fund, Royalties, And FDD?
The Ad-fund is a fee on franchisees that adds to a company advertising fund. This fee is a payment on the advertising and marketing that the corporate company provides to all of the franchises.
Royalties are percentage or fixed payments paid to the corporate company regularly. This fee is the ongoing payment for the right to use a company’s brand name.
The FDD, Franchise Disclosure Document, is the legal document given to potential franchise buyers to promise their disclosure of private corporate information.
For other franchise terms like these see our glossary terms article.
13) How Long Would It Take If I Wanted To Invest As Soon As Possible In A Franchise?
As per our process, it takes about a month or more to decide on a franchise to invest in once we have completed our search and analysis.
14) Can I Buy Multiple Franchises At Once?
It is advised to start small if this is your first investment in a real business (non-financial market investment) in the US. After operating the first unit, you can always open up more franchises in the same brand. That being said, many U.S. franchises require a commitment of at least 3 franchises over a certain time frame (generally 2-3 years).
15) Can I Invest In Any Franchise The Same Way As An American?
Visa Franchise has completed research and analysis on over 700 franchises on behalf of our clients. Unfortunately, roughly 30% of franchises do not accept franchisees who are not already Americans or green cardholders.
Typically, the franchises with these restrictions are the more established and well-known companies, such as Subway, Dunkin Donuts, and Baskin Robbins.
Visa Franchise specializes in working with franchises that are more than willing to accept franchisees that are foreign nationals pursuing an investor visa.
16) Will The Franchisor Give Me Employees Or Will I Have To Find The Employees Myself?
The franchisor will support you with training and depending on the franchise, they help with recruiting employees as well.
17) Are There Special Qualifications That I Have To Meet To Become A Franchisee? (Past Jobs Etc.)
Some franchises are much more stringent than other franchises. And will vet your previous work experience, net worth, liquid cash, as well as other criteria. In general, the franchises want someone entrepreneurial and willing to roll up ‘their sleeves to get the job done!
18) What Is The Largest Investment That I Could Do?
At Visa Franchise, we have advised clients who are opening up multiple franchises given their experience in the U.S. or their past jobs in management that surmount to well over $1 million.
19) In What Industries Does Visa Franchise Have Franchise Opportunities?
Visa Franchise works with many franchises within a diverse range of industries. We are always adding franchises in new industries to our portfolio based on the research and analysis work we do for our clients.
Some of these industries include:
Pet Care
Better Burger
Frozen Desserts
20) In Which Cities Or States Does Visa Franchise Have Franchise Opportunities?
Visa Franchise works with franchises with territory availability throughout the US. Many of our clients choose to reside in Florida, Texas, California, and New York but we’ve worked with clients throughout the U.S. and regularly travel on-site.
21) I’m not 100% confident in my English abilities. How can I best communicate with a franchisor?
Many franchisors do require that the franchisee speaks professional-level English. We have some clients who will have another partner as a franchisee that will facilitate the English requirement.
Also, Visa Franchise has franchisors who speak many different languages, including English, Spanish, Portuguese, French, Turkish, Chinese, Italian, and many other languages.