Why Should You Not Buy An Online Marketing Franchise Business-Part 2-

What Do You Pay For An Online Marketing Franchise Business?

You will be hard-pressed to find an online marketing franchise business that costs under $10.000 to establish, as you are responsible not only for the set-up, but also the daily running costs of your new online marketing franchise business. These include:

  • JOINING FEE – the upfront fee you pay the franchisor to access their business model and intellectual property and to set up your industries and businesses
  • SERVICE/SUPPORT FEE – the percentage, as determined by the franchisors, of your sale/profit that is put towards the ongoing support you receive, and for which you are liable on either a weekly or monthly basis
  • MARKETING SERVICES – your liability for contributions towards marketing and advertising, paid either as a percentage of sales/profit, or as a fixed amount
  • PURCHASING OR HANDLING FEE – paid to the franchisors if they purchase products in bulk and distribute these among the franchisees
  • ADMINISTRATIVE SERVICE FEE – paid where the franchisors extend their support to include admin and bookkeeping services, and will charge a handling fee for these services.
  • RENEWAL FEE – the cost of renewing your online marketing franchise license. Most franchises are granted for a fixed period, so make sure you know what the franchisor requires upon renewal before you sign on the dotted line.

The Other F-Word

Finance.  Investing in an online marketing franchise business won’t make accessing start-up funds any easier: there are no guarantees, and much depends on your financial-risk profile. So, how do you get the moneyto buy an online marketing franchise business?

  • CHECK IN WITH YOUR FRANCHISOR – the first thing you can do is check whether your franchisor has an in-house financing program or preferred lenders. Chances are that an established franchisor already has an established relationship with a number of financial institutions.
  • APPROACH YOUR BANK – most banking institutions have specific small-business support structure in place, and most of them offer tailor-made solutions for an online marketing franchise business needs. Do your research and approach your bank as soon as you have received the franchisor’s approval. Remember: a bank will ask to see your business plan and credit history.
  • APPROACH A SMALL-BUSINESS SUPPORT AGENCY – organizations like the Small Enterprise Development Agency have programs that support business start-ups. Investigate your options, or speak to a consultant.
  • PRIVATE LENDER – this shouldn’t be your first choice, but you could contact a private lender to assist with securing your initial finance.
  • BE WARNED – the interest rate will be higher and the repayment time frame shorter than that of a bank loan, so don’t take this decision lightly.
  • FRIENDS AND FAMILY – you might have a wealthy relative with whom you can work out a financing and payment plan, or you may want a partner with a friend or family member. Remember, though, that business and pleasure rarely mix, and you don’t want to run the risk of a soured relationship down the line. If you choose this option, make sure that there are contracts and documentation in place to protect you and your lender.
  • PERSONAL SAVINGS – if you have a business loan in place, then using your personal savings (separate from your day-to-day living expenses) as a buffer is a convenient way to deal with unforeseen expenses and emergencies.

LEGAL ASSISTANCE AND THE FINE PRINT

Investing in an online marketing franchise business isn’t just a matter of making a purchase and happily running the business while profits roll in. Certain contracts must be in place to ensure the protection of both the franchisor and franchisee. This is where an online marketing franchise agreement comes into play: it is a comprehensive document that sets out the business relationship between franchisor and franchisee, outlining the rules of engagement for both parties.

A good online marketing franchise agreement may be upwards of 60 pages, written in everyday language that is easily understandable to everyone involved. Such documents are usually drawn up by the franchisor’s legal team, but it is important that you understand the entire document and the meaning of all the classes before you sign it.

Below shows the benefits and challenges of investing in an online marketing franchise business.

Benefits And Challenges Online Marketing Franchise Business

Benefits Of An Online Marketing Franshise Business

  • EXPECTED COST: you know exactly what the cost of buying an online marketing franchise business will be.
  • TRIED-AND-TESTED FORMULAR:you are buying into a developed franchise business model that has a proven track record of success.
  • GUIDANCE: your franchisor and the rules that govern the online marketing franchise you buy will guide you in terms of location, purchasing, and the quantity and types of goods you need to purchase.
  • TRAINING: many franchises provide ongoing training to help you succeed.
  • EXISTING RELATIONSHIPS: your franchisor has a significant purchasing power due to its existing supplier relationships, and you are likely to benefit too.
  • SOUND BRAND: a strong brand comes with a strong marketing strategy, together with existing marketing collateral that you can use.
  • ESTABLISHED BUSINESS: why reinvent the wheel when you can benefit from having access to the franchisor’s successful model?
  • YOU’RE THE BOSS: although you must still adhere to a specific set of rules, you are in control of the success of your online marketing franchise business.
  • ONGOING DEVELOPMENT:you get to benefit from the time and money your franchisor spends on developing new products and services.
  • REDUCED RISK: this is probably the major benefit – using an existing business model reduces your exposure to risk.

Challenges Of An Online Marketing Franchise Business

  • INITIAL INVESTMENT:you can start your own online marketing business on a shoestring budget, but investing in an online marketing franchise business will require a significant upfront investment.
  • LOSS OF CONTROL: you won’t have total control over the goods you use and the services you provide, as you have to stick to someone’s rules.
  • LOCATION LIMITATIONS: the location in which you operate will largely be determined by the franchisor and what is available.
  • SERVICE RESTRICTIONS: you may have little control over the jobs you take on or turn down.
  • FRANCHISOR MISTAKES: you are largely dependent on your franchisor’s success and reputation. Any bad press affecting your franchisor may affect your online marketing business too.
  • ROYALTY PAYMENTS: for as long as you are a franchisee, you will pay a certain percentage to your franchisor (it’s much like renting a house).
  • MARKETING COST: you need to pay certain fees to enjoy the marketing support of your franchisor.
  • LIMITED FLEXIBILITY: online marketing franchise contracts have very specific standards, allowing very little opportunity for alterations.
  • FALSE EXPECTATIONS: opening an online marketing franchise business isn’t a one-stop-shop to wealth, and your success depends on the effort you put in.
  • PERSONALITY: if you want freedom and flexibility to be creative, you may not be of the right disposition to be a franchisee.

Just like franchisors will decide whether you are a good match for their business, so you, too, should contact a quick self-evaluation before you commit to entering into an online marketing franchise business agreement.

Here’s an online marketing franchise business handy checklist you can use:

STILL WANT TO TAKE THE LEAP?

Franchisee personality checklist

  • Is your business personality such that you will thrive in an online marketing franchise business environment?
  • Can you commit a lot of time and energy to establishing and running the business?
  • Can you truly afford it?
  • Do you have a good understanding of the relationship between the franchisor and franchisee, and are you willing to foster such a relationship?
  • Have you done enough research into the online marketing franchise business you are interested in? Have you spoken to the franchisor? Do you know what you are paying for?
  • Have you consulted other franchisees about their experiences to ensure that your expectations are realistic?
  • Have you sought financial and legal advice?

Investing in an online marketing franchise business is a considerable commitment. New an online marketing franchise owners spend a lot of time and money on their businesses – often more than you’d think. Your workload will affect your family members too, so it’s important that you get their buy-in.

Managing an online marketing franchise business is a great opportunity for any business owner who has the right personality, the willingness to work hard and the determination to succeed. If you are not afraid of hard work and performing within the confines of the online marketing franchise, then this option might just be for you.

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Fouzi Bach has 17 years experience offline business, marketing strategy and execution. He builds his first website for fun. He believes that successful marketing campaign is both customers focused and business minded. He believes also, you need to understand what works and doesn’t work before you invest any money.

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To Your Success,

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