Important Financial Questions to Ask Before Buying Your Franchise | VetCor

When it comes to investing in a franchise, money is often the most prominent thing on potential franchisees’ minds. Because the overall cost of every franchise can vary quite a bit depending on many factors, asking the right questions of every franchisor you are considering is necessary to make sure you are fully aware of what your investment will look like.

Questions to Ask Regarding Your Franchise Investment

What is the total investment required for this franchise? Your overall investment in the franchise will be different than just the franchise fee. The franchise fee will cover a good portion of your costs, but you will also need to consider your investment in real estate, inventory, insurance and royalties that will be involved in your total expenses to get your franchise off the ground.

How much capital do I need to have reserved? Even in the world of franchising, it takes time before a new business can break even and start generating revenue. While this generally happens much quicker for franchises than it does for independent startups, it is important that new owners have enough capital set aside to cover their expenses before this happens. This capital is responsible for covering both your business expenses (payroll, rent, etc.) as well as your personal living costs until you start making money, so it is best to overshoot when possible for peace of mind.

What is the range of financial performance for existing franchises? Every franchise will offer different financial performance, and it can vary wildly even from franchisee to franchisee. While it is impossible to answer exactly how much you will make as a franchisee, establishing a range among existing franchise owners can help you understand both the high and the low end of what you can expect your income to be.

How many financing options do I have to choose from? Working with a franchise typically gives you more options for securing capital than starting a business from scratch. Between Small Business Association loans, bank loans and franchisor funding, you will typically have several options you can make use of in order to invest—and your franchisor can help you determine exactly what your options are.

Are you ready to start on your franchise journey? We’d love to talk with you and answer any questions you may have! Get in touch to learn more.