Frequently Asked Questions

Below are answers to some of the questions visitors to All Franchise Network ask most frequently:

1. What is All Franchise Network?
All Franchise Network is an online marketplace that matches business buyers with franchisors and business opportunities. In addition, the website offers financing assistance and other resources to help entrepreneurs and small business owners.
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2. What is The Franchise Engine?
The Franchise Engine has detailed listings on over 1,000 franchisors and business opportunities. The Franchise Engine has developed technology that enables it to publish these listings on the franchise-related websites in its network (such as All Franchise Network) to present visitors with detailed information about franchise opportunities available for sale. Visit The Franchise Engine for more information about how it works.
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3. Why should I use All Franchise Network to find a franchise or business opportunity to buy?
The key to successfully buying a franchise or business opportunity is determining which business criteria (e.g. - price, location, type of business, terms, industry, hours, etc.) is most important to you, and then locating all possible options that meet your criteria so you can review which one is best for you. All Franchise Network is the ideal source for locating businesses to buy because you can search franchises for sale for sale using the exact criteria you are interested in. Then you can review the details of each individual franchise or business opportunity to determine which one is right for you.
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4. What's the difference between a franchise and a business opportunity?
While fairly similar in nature, there are very important differences between Franchises and Business Opportunities:

In simple terms, a franchise opportunity is a relationship between a seller and a buyer that continues for the duration of the buyer’s involvement in the business. A franchise differs from a business opportunity in two important ways:

1. A franchisor generally collects an “up front” fee from the buyer but also collects on-going royalties in exchange for a proven business model. In a business opportunity, the buyer pays for the system or training, but does not have a further obligation, unless his contract specifies he buy inventory from the seller.
2. A franchisor, in order to protect the brand and ensure consistency of the product, requires strict adherence to specific guidelines. In a business opportunity, the buyer may learn a specific program but is not required to follow the system.

The Federal Trade Commission (FTC) regulates franchising at the federal level. In order for a business to be labeled a franchise, three elements must be in place:

1. Franchisor allows the buyer to use the franchisor’s trademarks
2. Franchisor collects a fee (at least $500) from the buyer within the first six months of operation
3. Franchisor exercises “significant control” over the buyer’s operation on an ongoing basis

If a business meets the above criteria, it is considered a franchise by the FTC and is required by law to follow federal guidelines. The most critical FTC guideline requires franchisors to provide buyers proper disclosure information prior to finalizing the sale.

Before a potential buyer can purchase a franchise, he must receive specific disclosure information about the franchisor, called a Uniform Franchise Offering Circular (UFOC). The UFOC is a valuable document that will assist a buyer in completing the due diligence (the process of investigation into the details of a potential investment and the verification of material facts) before purchasing the franchise. In many cases, individual states have additional guidelines a franchisor must meet to sell locations in that state.

In a franchise opportunity, the franchisor has a vested interest in the success of the buyer (franchisee) because it receives ongoing royalty payments. Therefore, the franchisor is usually committed to building the brand by adding locations, monitoring individual performance based on a proven system and assisting the franchisees to increase their revenues. This relationship lasts the duration of the franchise agreement.

In a business opportunity, the seller makes his money by delivering the business system, training, equipment, or service method to the buyer. In some cases, the seller may also make residual income for the ongoing sale of products or services, but for the most part, the relationship is over once the purchase is final.

While a business opportunity is not federally regulated, some states will encourage a general form of disclosure prior to purchase, but most do not require it. If a business opportunity does offer a disclosure document, it may provide only general information. The lack of regulation can speed up the purchase process, but it also leaves the buyer responsible for a thorough investigation of the business.

Since there is no ongoing royalty payment, there is no vested interest by the seller to ensure that the buyer succeeds in the business. Although many business opportunities provide system training, they may not require or monitor performance. Sellers generally don’t invest in local marketing or operational support, but buyers are given complete freedom to run the business.

Income expectations for a business opportunity may be lower than for a franchise opportunity, but they are also a lower investment than most franchises. A business opportunity may not require costly leasehold improvements or large working capital reserves, making it an option for many people whom may not have the capital available to purchase a franchise. For many buyers, a business opportunity provides the flexibility to start out as a supplemental income or home-based business, but has the potential to support their lifestyle and meet their financial goals.

Which opportunity is better? The answer, obviously, is that it depends on the buyer. An entrepreneurial individual may find the confines of a franchise opportunity limiting and thrive in a business opportunity where he makes all the decisions. Another buyer may find the brand recognition, ongoing assistance, and company-wide marketing programs associated with a franchise just the safety net he needs to feel confident when starting a new career.

5. What does it cost to use All Franchise Network?
Access to the entire site is free, and anybody can search franchises free of charge. If a buyer wants more information about one or more franchises or business opportunities, they can submit a Request for Information for free. The franchisor will respond directly to the buyer to ensure they get the information they need in order to properly evaluate their options in buying a franchise or business opportunity.
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6. Where can I obtain financing to help me buy a franchise?
There are a variety of sources available for franchise financing. One of the best resources for finding franchise-friendly lenders is directly from the franchisor themselves. More often than not, the franchisor has developed relationships with lenders that are familiar with their franchise system and are more like to lend to their franchisees.
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7. How do I get more information about a franchise or business opportunity listed on All Franchise Network?
It is extremely easy to get more information about a franchise or business opportunity. Simply view their listing and then add them to your Request List. When you are ready, click the "Request Info" button in the Request List and fill out the short form. We will process your request and send it directly to the franchisors that interest you, and the franchisors will reply directly to you to ensure you get the information you desire.
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8. What are the key motivators for people going into business for themselves?
Before making a decision to purchase a business, a buyer should understand his or her objectives to make sure those objectives can be met by purchasing any or a particular franchise or opportunity. Most relevant surveys reveal similar responses and, interestingly, making money is not at the top of the list. Here is a list of the typical answers, in the order of importance:

• To control my own future
• To work for myself
• To take advantage of my skills and abilities
• To make money

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9. Should I start my own business, buy an existing one, or buy an opportunity?
An existing business has a historical track record (good or bad), which can be used to evaluate the business. An existing business has usually shown there is demand for its products or services, and it should have, among other things, detailed financial records. Sometimes, a seller will agree to stay with the business and help to train a new owner and to provide seller financing. These are important factors because many small businesses tend to fail during the early stage of their development.

On the other hand, there can also be disadvantages to buying an existing business. A buyer will be assuming an established corporate culture and infrastructure, which may make implementing changes more difficult. Also buyers will generally have to pay a premium for an existing business.

If you don't want to buy an established business, but don't have an idea or the experience to start your own business from scratch, then buying a franchise or business opportunity might be your best bet.
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10. What should I be looking for in a franchise business?
A buyer should only consider a franchise business he or she will feel comfortable owning and operating. The time and effort that will be required is as important a consideration as is how much the buyer can afford to pay for the franchise or business. The amount of cash the buyer hopes or needs to regularly take out of the franchise or business is very important, especially if the business is to be the buyer's only source of income. The primary benefits of buying a franchise are the franchisor has a well-developed system that is proven to be successful, and you have the support of the franchisor, and the entire franchise network, to some extent. In addition, an established franchise's brand is a tremendous asset for any franchisor to operate under.
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11. Should I hire an attorney?
It is a good idea to retain an attorney to review the necessary legal documents. Although most franchises already use any attorney, it is important that the attorney you hire be familiar with franchising to be as effective as possible during the process.
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12. What is due diligence?
Due diligence is a systematic process for acquiring and analyzing information to help a buyer determine whether or not to proceed with a proposed business transaction. The information obtained relates to all aspects of the business to be purchased.

Due diligence should include both quantitative information, such as sales and other financial data, and qualitative information, such as an assessment of the existing management, internal systems, existing licenses, location and other matters. Sometimes the information to be reviewed can be quite technical or industry specific. It is important that the person doing due diligence have a complete understanding of the information being reviewed.

A good attorney and accountant are extremely important to have as part of your due diligence team.
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13. During the due diligence process, what are some significant warning signals, and what should I do about them?
If the franchisor or business opportunity seller has done any of the following, then treat them as warning signals:

• Imposed an unrealistic time frame for the transaction.
• Withheld key information.
• Limited access to information and people.
• Provided unclear or biased projections.
• Presented information that is significantly misleading or false.
• Displayed a lack of commitment to remain after the sale.

If these signals are present you should:

• View them as real warnings of increased risk to the transaction.
• Increase the amount and extent of due diligence procedures to ensure a realistic assessment of the franchise or business opportunity.
• Determine whether to invest more time investigating the franchise or business opportunity, or to simply pass on the deal.

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14. What are the main reasons for the failure of a franchise after it's bought?

• A failure for the franchisor to support its franchisees.
• The due diligence procedures were not adequate.
• Inadequate margins to support the franchise royalties and advertising fees.
• A change in business environment created unexpected problems.

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15. How much cash do I need in order to purchase a franchise?
The franchise fee represents the amount of money required just to purchase the rights to a franchise. In addition to that, you need capital to build the facilities, stock it with inventory, implement marketing, have cash for operations, and more. As a result, the amount of money required to successfully open a franchise can be double the franchise fee or more. However, some franchises and business opportunities can be purchase and up and running for less than $10,000. Our database contains franchises that are low cost. To find some that are in your budget, search our database of franchises.
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