The BizBuySell Small Business Community

  • Get Expert Advice

  •  • Find Local Service Professionals

  •  • Share Your Experiences

Franchise Requirements Question

Hi, I was just wondering on all these franchises you see minimum liquid investment and minimum net worth requirements. I want to know what if you just have the minimum that they have listed? or a little over that? how likely are you going to be given a franchise assuming everything else is acceptable (business experience, etc)

Or are the minimums just there because they had to put something and you usually have to have a lot more than that to start one?

Also how accurate are the earning claims inside a UFOC or FDD...And what is profit as a percentage of sales in most food franchises? I'm assuming 10%-20%? which would be closer 10 or 20?

I am looking at a Great American Cookies Franchise if anyone wants to chime in

No User Photo

Answer This Question

max 5000 characters

Web Reference (optional)

e.g., "www.mywebsite.com"

Review Community Guidelines

Help keep our Community clean and on topic. The BizBuySell Community is a place where you can discuss your questions, concerns and knowledge with others you can trust. It is not OK to use this forum to solicit others for personal or financial gain, or to rant about personal issues. It's all in the guidelines.

Submit Your Answer
Answers (3)
No User Photo
metrobrokers
Gwinnett County, GA

I would be happy to discuss this question with you. I am Church's chicken franchisee. Please give me a call and I can give you exact breakdowns and numbers for Church's. I have multiple locations and some are available for sale also. Give me a call. Anil Shah. ashah786@gmail.com. 404 513 9239

Oct 1, 2009
Jon Holmquist
Edgemaster Model 400 sharpener
President
Marion County, OR

Anil, the answer from David is right on, especiall item 7 of the FDD. In my case the opposite of what you would expect is true. We encourage people to get in with as little up front as possible. We had to put the higher figure incase someone chose to open a stick and brick location. Maybe condo association wouldn't allow someone to run a business out of the unit, then they would have to rent in another location thereby opening a whole can of worms, like signs, hours, employees, sex-discrimination regs, employee health ins., etc. etc. etc. That is why we encourage one owner running his/her own business and keeping it simple. Read everything, weigh everyone's ox to gore, or equipment to sell and everything. We try hard to keep it simple. Good Luck, Jon at Edgemaster Mobile Sharpening.

Oct 1, 2009
No User Photo
Franchise Advisory Group
PA

Anil,

The minimum requirements that are listed are based on total investment and what the bank requires to provide financing. There is a good chance that you'll need more and that depends on lease hold improvements and other factors. You should review item 7 (Estimated Initial Investment) to see what the total investment will be and what it consists of. In most cases you will need 20% cash from that number. Earning claims in the FDD are usually based on either what current Franchisees make or what the corporate locations make. They are accurate, but are not a guarantee. It's important that you make validation calls and speak to the Franchisees themselves. As far as profits are concerned, it really depends on the operator and the concept. Most food businesses show net at least 20%. Again, this is a good question to ask the current Franchisees. There are Franchises that have a fixed royalty fee that is not based on gross sales, those type of Franchises you should net higher. Please do not hesitate to contact me directly with any other question. 888-241-6629 or david@franchiseadvisorygroup.net

Oct 1, 2009

Start a Discussion