Deciding how to buy a franchise in the USA is an important step for any investor. However, sometimes they do not have the right advice and make mistakes in their entrepreneurship process. Although the United States is the best country to invest in, such action must be carried out carefully and with the proper advice of professionals.
That is why this time we will talk about 7 things you need to know before buying a franchise in the United States.
If you already feel ready to invest in the USA and want us to start creating your business plan, contact us.
1. Initial investment to acquire a franchise
One of the first things you need to buy a franchise in the United States is to make a budget, in which you explain the liquid capital in the bank for operating costs and for unforeseen costs.
This can vary completely from business to business. Our recommendation is to leave between 10% and 30% in liquid capital for a small business. As such, there is no magic number or exact amount, but this is an average for a small business in the USA.
2. Partners and distribution of franchise shares
If you are going to have partners in a business, it is important to know a few things.
To. It is not necessary to have a U.S. partner to incorporate a company in the USA.
B. What you do have to consider (for immigration and tax purposes) is to know who will have the largest percentage in the company. This is extremely relevant for the investor visa. To do this, it is important to consult an immigration lawyer before starting any project.
C. If there are more partners, you should ask yourself, is the investment still profitable? To do this, you should consult with experts and discuss the project in more depth. Schedule a free initial consultation with our team to corroborate it.
3. Additional costs to the franchise investment
It is important to have an approximate amount ranging from $8,000 to $16,000 USD for expenses before buying a franchise in the United States and/or starting a profitable business from scratch in the USA.
1. Travel costs: To consider a location and know the franchises well, it is necessary to make 2 to 4 trips. It all depends on the location and days in which the trips are made. On average, expenses can vary between $2,000 and $4,000 USD.
2. Professional services costs: The best investment you can make before working on any project is to get tax and legal advice. Many initial consultations are free at first, however, since you require these services they can vary depending on what you need (Between $5,000 and $10,000 USD).
3. Other expenses: There will always be unforeseen expenses and more so when you are starting a new project. It is important to be prepared for these types of expenses. For example, passport renewal, translations of some documents, administrative procedures or some other service ($1,000 – $2,000 USD).
4. Franchise Location
The location of where you want to live and/or where you want to put your franchise is crucial.
It should be noted that just because you like to visit some cities does not mean that they are the ideal cities to live in or are good cities to start your franchise. There are several factors to take into account on this point.
a) There are large differences in costs in cities and states. For example, an average house in the state of Texas, in 2019, was valued at $196,000. However, an average home in California is valued at more than $547,000.
It is important to consider these types of amounts, as they can vary from state to state, but also from city to city. For example, an average house in the city of Austin, Texas, is valued at just over $368,000. While in the city of Mcallen, in the same state, houses are valued at an average of more than 136 thousand dollars. A big difference in the same state.
b) It depends on what your life goals are, there are cities and states that will be more in line with your lifestyle and what you are looking for. Let’s not forget that the purpose of all this is for your family and for you.
There are states and cities that are better than others in terms of educational levels, entertainment, nature, and/or nightlife. Therefore, depending on the aspects that are most important to you, they will influence the decision on the ideal location.
5) Franchise Territories
It is one of the key parts in the processes of buying a franchise in the US, which sometimes passes as something secondary. First, let’s discuss what a territory is.
A territory is the exclusive geographic area where the franchisee will be able to operate the unit. They are delimited by kilometers, cities, states, regions, or by travel periods. It all depends on the characteristics of each turn.
It is for this reason that they are one of the most important issues for the following reasons:
a) Not all franchises are available in all territories and not all franchises have a nationwide or statewide presence.
b) Just because there is an available territory does not mean that it is a good territory for business. For example, it is probably better to acquire an ice cream franchise in a warm city where there are more families, than in a territory where it is very cold and there are not so many families in that area.
6) Time spent operating the franchise
You have to ask yourself the question, how much time do you have available? It is important to define how much time you will be able to dedicate to your project. Many clients have their businesses in their home country, just like the business they started in the United States. So it is essential to have this part very clear with the franchisor before buying a franchise.
Some franchises will require you to be in business full-time, or part-time. Although, some will also only ask you to have an administrative role.
It is important to define from the beginning what your role will be when buying a franchise. We share with you an article on semi-passive investments so that you understand what they are and why they are not the best option to immigrate: Differences between active and passive investments in the United States.
7) You manage the franchise yourself
Something that has to be valued from the beginning, is you. That is, it is necessary to know what your strengths are, what your weaknesses are, what you know how to do very well, if you are an introverted or extroverted person, what your goals are, etc.
Therefore, with our clients we are dedicated to understanding and getting to know them in order to advise them based on what they need. Not only do we know them personally, but we take personality and aptitude tests to understand their profile and personality.
If you want to know what else you need to buy a franchise in the USA, you can contact us to start working on your project. Contact us.
