Karli Barnett: Are you thinking about buying a franchise or taking over a business? The upfront fee is just the beginning. Atlanta News First anchor Brooks Baptiste sat down with the President and Owner of First Choice Business Brokers Peachtree about what you need to know before you sign a contract.
Brooks Baptiste: You own a franchise yourself, so what is the real total cost for people looking to get into that side of things?
Torey Hinkson: First, Brooks, thanks for having me. This is a great opportunity for many people. It is not for everyone, but I can offer some tips to help people interested in entrepreneurship and business ownership make the right decision for themselves. On cost, it starts with a document called the Franchise Disclosure Document. That is a buyer's guide, required by law to be provided to you, with 23 specific items. Items five, six, and seven address costs.
Brooks Baptiste: What is a realistic number? Are we talking ten thousand dollars, or a hundred thousand? I know it varies, but realistically.
Torey Hinkson: There is a range for total project costs. On the low end, a significant five-figure number, maybe fifty thousand dollars. On the high end, it can easily reach five hundred thousand to a million dollars, depending on the business. A home-based business is less. A business with a physical location, equipment, furniture, and fixtures pushes you toward the higher end.
Brooks Baptiste: Some people may assume you are getting instant wealth, but in reality it is more complicated than that, right? It takes time?
Torey Hinkson: With a franchise, you get a playbook and a brand. Think of it like handing two people the same recipe and the same ingredients. One meal may turn out better than the other, because each person has to put in the work. In a business, that is not an hour in the kitchen. It can take months or years to go from no revenue to a fully ramped-up operation.
Brooks Baptiste: Franchise versus buying an existing local business. Which is generally less risky?
Torey Hinkson: Usually an established, profitable existing business is less risky, because it is already generating cash flow. You are not starting from zero. That said, a franchise that is a household name, the brand everyone recognizes off the highway, can be a real accelerant and can lower risk too. It depends on what is best for you.
Brooks Baptiste: If a business is established, what questions should I ask the current owner or the franchisor before I sign?
Torey Hinkson: That is where I make my living. The key is not just to ask the questions, but to verify everything. It starts with the financials, making sure the business is performing as represented. Then you evaluate how dependent the business is on the owner. If I buy it and the owner goes off to retirement, does it still work for me?
Brooks Baptiste: Torey, thanks for spending time with us. We appreciate the insight.
Torey Hinkson: Thank you, Brooks. Glad to be here.
Karli Barnett: Some great advice. More coming up on Getting By Better.
