Choosing to open a franchise may be one of the most important decisions you ever make, and it should not be taken lightly. The choice is so substantial that some people make their living by offering guidance on opening franchises; if you’d like to speak with any of them, please peruse our Franchise Consultants page.
To get you started on the journey to becoming a franchisee, here are self-reflective and self-evaluative questions you can answer.
What are you interested in?
One of the biggest appeals of opening your own business is doing something you love. There’s no point in changing your employment situation if it is not for the better, so be sure you love a franchise before buying in. If you have doubts and concerns, address them with the franchisor until you can enter the franchise agreement with confidence.
In what field is your experience?
If you’re a great manager with years of experience leading teams, perhaps a more managerial franchise is right for you. Or if you like to be in the thick of things, handling it all yourself, maybe a more hands-on franchise is right for you, where you are the only one doing the work. There is always the option to grow your business and bring in more employees, and you will be heavily involved in the initial stages, so think how directly involved you’d like to be in a few years’ time.
How much do you have to invest?
What do you own and what do you owe? It seems a simple question, but before deciding on a franchise, make a list of both so it is clearly before you. Then consider the cost of each franchise, including the franchise fee, start-up costs, and working capital. It is possible to get a loan from a third-party or even directly from the franchise company in some cases, but weigh your options to see if that is something you want to do. Starting you own business can be tremendously rewarding, but it is also a lot of work and can be somewhat stressful; don’t add to that stress by reaching beyond your means.
Investing less money in a franchise does not mean it cannot be profitable or that it will have a lower return on investment. It may mean that you have to invest more time into the business at first to grow it to increased profitability, but there are a variety of low cost franchises available.
Where should you open your franchise?
The importance of location cannot be overstated. Personally, it is beneficial to be close to home, cutting down on commute time and expenses. It is also vital to have a location that suits the individual needs of the business; does your business require steady footpath traffic? Or ample parking space? Do you need a large building to display models? Or would a smaller space help keep costs low? Does your city have the target population to support your proposed business?
For more information on how to choose the perfect franchise location, see our previous article here.
Are there more pros or cons?
Once you’ve compiled your short list of franchises, compare and contrast them. One may have a better investment price; one may have higher projected return on investment; another may be a wonderful location. You don’t want to question a decision once you’ve made it, so don’t rush yourself. Take your time to make a pro and con list, meet with a franchisor or two, and discuss your choices with trusted friends and family, or perhaps a business advisor.
What’s your business plan?
Your franchisor should assist you with your business plan, but it is your business and you want to ensure you are in control. A good business plan reviews and forecasts all aspects of the business. The franchisor can provide information on the history of the franchise, staffing requirements, and estimate financial costs, but be sure you also have data on your specific region, including competition in the area, sales and marketing requirements, and the estimated profits.
To see more about crafting your business plan, see Franchise Direct’s recent blog post here.
Remember, choosing your perfect franchise can be a marathon, not a sprint. Don’t rush yourself and don’t be afraid to ask for help and advice from those you trust. When the moment is right, you’ll know — best of luck on your journey to becoming a business owner!
Post by Anne Rowan