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Key considerations for a franchise investment

by Joe Rosengarten on 27 Feb 2018

Franchising has been one of the biggest wealth generators in North America over the past four decades, and it continues to create new millionaires each year. However, for a franchising investment to be a success, investors need to first find the right parent company; a company that is on an upward trend in terms of growth and development.

“Potential investors should look for a franchising company with a highly recognized, widely respected brand name,” says Steve Drexler, President, ‎St. Louis Franchise. “Investors need to do their research and ensure the company has a proven concept and business model that produces results. Finding a company that is committed to providing great food and fantastic service is also very important.”

Drexler also encourages potential investors to look for a brand they already like and could see themselves becoming committed to and representing. It’s also a good idea to visit some of the existing units to get a sense of how they are being run and how they are performing.

“Before you make any decisions, you need to make sure the consumer likes what the franchising company is selling,” Drexler says. “Are there patrons within the franchise stores? Do they seem to be enjoying themselves? Does the company have one busy store or are they all busy? Is it something you could see yourself owning? Those are the primary questions that every investor should consider.”

In order to streamline the franchising process, St. Louis Franchise has developed relationships with two of Canada’s Big Six banks, who lend funds to potential investors through a small business loan program. It’s one of the many benefits being enjoyed by an increasing number of Canadians eager to diversify their investment portfolios.

“Investors enjoy tax advantages, capital gains exemptions if and when they decide to sell their investment, and the opportunity to defer income,” Drexler says. “Of course, there is a lot of responsibility making sure the business runs well, but you’re not bound to a desk or an operation that is not working. You have personal freedom and control, and that is one of the major benefits of franchising.”

Download this whitepaper to find out more about how Canadians are benefitting from franchise investments.

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