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The vast majority of franchise royalties are between 4% and 8% of total revenues.

This is the most frequently asked question and franchising allows the buyer the perfect way to get the answer. The franchisor will supply you with a Uniform Franchise Offering Circular (UFOC), which includes a complete list of their franchisees' names and phone numbers. This enables you to ask existing franchisees questions such as: How much money can I make after buying a franchise? How long did it take you to get your business up and running? Were there any surprises that I need to know about? What is the franchisor really like?

Franchises are usually classified into four different categories or levels. Choosing the right level of franchising for personal and professional satisfaction is almost as important as choosing the right franchise. There are four major types of franchise agreements you should consider when buying a franchise:

Single-Unit Franchises
A single-unit franchisee has the right to operate one franchise unit. Most franchisees enter the world of franchising by owning one unit. It is an excellent way to gain an understanding of the franchise system before considering additional units.

Territory: The single-unit franchisee may have a small radius of exclusive territory to operate within. If it is a retail store, it may be a two or three mile radius around the store. If it is a home-based business, it may be a few specific zip codes.

Level of Participation: The single-unit franchisee is very involved with all aspects of the franchise's operations. Because of this level of involvement, these franchisees are also known as owner-operators.

Multi-Unit Franchises
The franchisee acquires more than one unit of the franchise, usually at a reduced initial per unit franchise fee. A good sign of the health of a franchise organization to consider when buying a franchise is that many of the franchisees are multi-unit owners.

Territory: There is usually no exclusive territory where the franchises must be opened. The franchisee may have one unit in one part of town with a surrounding radius of exclusivity and another unit in another part of town 15 miles away or even in another county with its exclusive radius of operation.

Level of Participation: The franchisee is less involved with each unit's operations but is managing multiple operations and will need to have some level of supervision in each unit. The franchisee acts as a general manager. If many units are opened, a general manager and additional administrative and training staff may be needed.

Area Developer Franchises
This license usually grants the franchisee the right to open a certain number of franchises in a given area. There is usually a production schedule where the area development franchisee must open a certain number of franchises during a certain period. As long as the area development franchisee stays on track in opening franchises in the area, he/she has an exclusive area where no other franchisees are allowed to open a franchise. Area development franchisees also typically pay reduced franchise and royalty fees.

Territory: The area development franchisee maintains an exclusive geographic territory as long as the opening schedule is maintained. The territories may range from a city to parts or all of a county or state.

Level of Participation: The area development franchisee will be very involved in the opening of the first store to ensure its success. Another important function will be to look for qualified real estate to open the next few locations. Once several locations are open, the area development franchisee will need assistance to manage the units.

Master Franchises
Sometimes called a regional developer, a master franchisee has all the rights of an area developer and usually assumes a larger area. The main difference is that the master franchisee, in addition to opening franchises at reduced franchise and royalty fees, can also sell unit franchises, multi-unit franchises and area development franchises and profit from those sales. The master franchisee usually receives a part of the ongoing royalties paid by each franchisee. There may be additional income available from distribution of products through the franchisees in the area and possibly some real estate interests in franchisee locations. The master franchisee will usually operate at least one unit for income generation, for use in franchise sales, and for use as a training facility. Master franchises are rare, and when they are available, they are usually sold quickly. Because of the multiple revenue streams associated with a master franchise, the potential return on investment is substantial.

Territory: The master franchisee maintains an exclusive area that will remain exclusive as long as the master franchisee meets the development schedule of franchises in the territory. The territory is usually a large metropolitan area, a state or group of states, or even an entire country.

Level of Participation: The master franchisee will usually open at least one unit and use a manager to manage it while selling other "sub-franchises" and helping them to operate properly. Very rarely is a master franchisee "hands on" in a unit franchise. He or she generally spends more time operating as a business consultant or coach to help the franchisees become successful.

Once you have decided on buying a franchise, the evaluation process involves a confidential consultation with a Sunbelt Franchise Specialist, as well as your own research:

Confidential Consultation
We will arrange a meeting about buying a franchise. We will discuss your goals and desires and obtain more detailed information about you and your background, which is accomplished through a series of questions and answers.

Development of Evaluation Model
We will use the information gathered to develop a model for you that will be used in evaluating franchises. This customized model will contain the elements you feel are important in a business. The model will be used to identify opportunities that meet your requirements.

Presentation of Franchise Opportunities
We will present several franchise opportunities to you that match your model. We will then meet with you to discuss these opportunities and find out if you would like to research any of them further. We will introduce you to the franchise companies that you have expressed interest in so that you can begin to learn more about them.

Individual Research
You will conduct a complete and thorough investigation of any franchise opportunity that you feel may be right for you. Though we cannot do your research for you, we will assist and guide you throughout this process. If you decide to buy a franchise, we can help you locate financing sources, franchise attorneys, CPAs and other resources you may need.

Even though the SBA-qualifying standards are more flexible than other types of loans, lenders will generally ask for certain information before deciding to use an SBA loan program. Generally, lenders will need the following documentation to evaluate your loan request:

Business Profile
A document describing type of business, annual sales, number of employees, length of time in business and ownership.

Loan Request
A description of how loan funds will be used. Should include purpose, amount and type of loan.

Collateral
Description of collateral offered to secure the loan, including equity in the business, borrowed funds and available cash.

Business Financial Statements
Complete financial statements for the past three years and current interim financial statements.

Personal Financial Statements
Statements of owners, partners, officers and stockholders owning 20% or more of the business. The strength and accuracy of your financial statements will be the primary basis for the lending decision, so be sure that yours are carefully prepared and up-to-date. The most important documents in your financial statements are:

• Balance sheets from the last three fiscal year-ends.

• Income statements revealing your business profits or losses for the last three years.

• Cash flow projections indicating how much cash you expect to generate to repay the loan.

• Accounts receivable and "payable aging" breaking your receivables and payables in to 30-, 60-, 90- and past 90-day old categories.

• Personal financial statements from you and your business partners listing all personal assets, liabilities and monthly payments, as well as your personal tax returns for the past three years.

Source: Small Business Administration, www.sba.gov.

At Sunbelt, we believe in and know about franchising because all of our offices are owned by franchisees. In fact, Sunbelt is the number one rated and largest business brokerage franchise company in the world (we are consistently ranked #1 by Entrepreneur magazine in our category).

Last year, Sunbelt acted as the intermediary in business sales totaling more than an estimated two billion dollars. With thousands of business buyers walking through our doors, we discovered that nearly 90% of qualified buyers were looking for a business with the same characteristics - different kinds of businesses, but the same characteristics. They were looking for a business that could be bank-financed and that offered on-going marketing, training and support for the life of the business. Are you looking for a business with these characteristics? If so, you are looking to buy a franchise.

As the largest business brokerage firm in the world, Sunbelt is regularly contacted by franchisors looking to expand their concept. Hundreds of these franchisors have come to us because of our national presence and our ability to bring qualified buyers to the table. Consequently, we are constantly pre-screening franchises to determine whether they meet our high standards. As a result, we are able to present you with a wide variety of franchise opportunities.

Our ultimate goal is to help you find an opportunity that will be good for you and your family. We provide you with guidance throughout this process, but you never pay us for any of our work, before or after you buy a franchise. Our income fees are paid by the franchisors for referring qualified and educated buyers to them.