Posts Tagged capital
What’s the Cost of Franchising Your Business?
The cost of franchising is often a smaller investment than the cost of establishing even one new outlet. After paying the cost of the franchise program, the remaining costs of expansion (as well as most of the risk) are assumed by franchisees. And since franchisees usually pay the franchisor an up-front fee and royalties, the right strategy for selling your franchise idea can become an immediate high-impact low-risk revenue source.
The fixed and variable expenses involved in running a franchise company are much lower than operating a similar number of company-owned facilities.
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Franchise Advantages
Less money is needed to advertise a startup if it has a well-known image and is well thought of by the public. The standard sign will bring the traffic into the business. This is a huge advantage over opening a business with no preconceived feelings for it. A good location with lots of traffic will help to make any known franchise do well since the buying public knows what the company is about and what they offer.
The franchise game plan
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“Hey, why’s the stock down?”
If you executives and investor-relations professionals had a dime for every time you heard that question on the phone or voice mail recently, you’d be like the rich guy Dudley Moore played in the 1980s movie “10″ who said, “I wish I had a dime for every dime I have.”
We’ve mentioned here that both your good and bad stuff will get more attention now. Markets are inefficient, risk-management is expensive, and rational money is staying out. If your debt becomes a bigger weight because of the decline in your equity’s value, you’ll pay for it. If you’re making transactions that press you against lending ratios, you’ll suffer. If there are any reasons at all that your neighbor in the peer group offers better safety – maybe your efficiency measures are weaker, your market is more susceptible to competition, etc. – your rational money may flee.
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The Use of Common Stock in Venture Capital Transactions
When raising capital for a business venture, a company can either raise debt capital, equity capital or a combination of the two. Debt capital is money loaned to the company at an agreed interest rate for a fixed time period. Conversely, equity capital is money invested by owners (shareholders) for use in business operations that need not be repaid. Combinations include convertible securities which may be debt that can be converted into equity at some point in the future.
The simplest form of equity capital is common stock. Common stock has many distinguishing factors as follows:
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I Want to Franchise My Small Business – What Do I Do Next?
Many small business entrepreneurs build a local business and do such a wonderful job that they have people lining up at their doors, literally. Many of the customers are quite happy to give them that unit of trade we call a dollar for their goods and services. Then one day someone who knows something about business, or maybe not too much, states;
“Boy, you have a great little business here, you should Franchise This!”
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