Beyond the Numbers: Evaluating the Real Costs and Value of a Franchise Insights from Kumon, an international education franchise.

You may already be sold on the benefits of opening a franchise versus a startup. Or maybe you're still weighing your options. Either way, it's in your best interest to get a clear snapshot of how you'll be spending your money. In this article, we focus on helping you uncover the true financial reality of any franchise and business opportunity.

After you ask the big questions, keep digging.

Yes, it's normal to ask questions such as "how much can I make" and "how much will it cost?" But those big, ballpark numbers can sometimes be deceiving. To create an accurate financial picture, make sure you're also on the lookout for:

• Unexpected expenses, both in the start-up stage and in ongoing operations
• Franchise-specific incentives other options may not offer
• Operational advantages that can help you acquire new customers or retain existing ones

First, look for unexpected costs that can creep up and add up.

No one wants to get too far into their franchise research before discovering they're responsible for a five-figure security deposit, $10,000 in architect services and $50,000 in leasehold improvements. While this example isn't typical, it isn't extreme, either. It's best to be aware of such expenses early and factor them into your initial financial calculations. To get a good list of what to look for, click here.

Compare the financial support offered by each franchise.

Next, look closely at the expenses a franchise will pick up for you, or at least help you cover. For example, at Kumon, we pay part of your rent for the first year, up to $12,000; provide 100 percent of your furniture and fixtures; and reimburse the cost of fabricating and installing store signage, among other things. Every franchise is different. In Kumon's case, we off-load up to $31,900 of our franchisee's expenses, and almost two-thirds of that relates to start-up costs—where most people appreciate financial help the most.

Look for business advantages in every business model.

Just as there can be unexpected costs, some franchises provide built-in advantages that can positively affect your bottom line but easily fly under your radar if they're not pointed out. Let's use our after-school education category as an example. This is a category where most companies focus on tutoring–and tutoring businesses are traditionally seen by parents as destinations for struggling kids who need a quick academic catch-up. In such an environment, it's natural for parents to enroll their kids expecting to pull them from the program once their grade improves. This can lead to shorter customer life cycles and more frequent turnover, placing even greater urgency on continually acquiring new customers.

If you consider how the Kumon business model fits in this space, an interesting difference emerges.

Because Kumon is a long-term enrichment program designed for kids from as young as 3 through high schoolers completing the program with calculus and Shakespeare, Kumon not only helps kids catch up—kids tend to stay long-term. Kumon parents are also inclined to enroll multiple kids in the program. Why is this important? Because it's easier and less expensive to keep existing customers than it is to acquire new ones. Certainly, every business needs a concerted new business effort, and Kumon is no different. But this is an example of how looking deeper into each franchise can help you find value that's hard to quantify in dollars. Learn more here.

Good luck with your research. Now go forth and franchise!

At the end of the day, you want to choose a business that's challenging and rewarding and empowers you to channel your talents and ignite your passion. But that's only possible if the day-to-day finances work for you. Knowing how to look a little deeper from the start can help you make the decision that feeds your soul and your bottom line. For more information on Kumon, click here or call 855-599-0947.