Before you buy a franchise, it’s crucial that you stop to consider all of the factors that go into selecting the best one for your level of commitment of both time and money. Running your own business is no small affair and you need to do an extensive amount of research first.
But many first-time owners aren’t sure where to start and even the top franchise opportunities don’t make it any easier to figure out whether they’re worth the significant investment of resources required. So in an effort to help out newbies and veterans alike, here are the important criteria necessary for selecting a franchise.
It all starts with money, namely how much you’re going to spend in an effort to get your new business off the ground. The first major expenditure on your part will be the upfront fee to buy in. This amount will fluctuate based on the type of franchise you wish to purchase.
After the initial investment of capital, there will be a variety of other fees that you may be expected to pay. Licensing fees, membership fees, royalties, not to mention the operational costs that every business would be expected to incur such as rent, legal costs, insurance premiums, employee compensation, and so forth.
First-time entrepreneurs in particular usually gravitate towards becoming franchisees because this arrangement comes with a built-in support system to help your business grow and thrive.
This support might come in a number of ways. The first and perhaps most valuable is brand recognition. If you’re opening a Subway sandwich shop, you can feel comfortable knowing that the general public is already well-acquainted with your brand. So your marketing and advertising efforts and costs might be considerably lower than with a business that no one has ever heard of before.
Many franchisors will also provide training for you and your employees so that you can provide the product or service at a level of quality that customers come to expect from your franchise brand. Technical support is also usually available should some specialized piece of equipment break down or you just need help operating it.
So before you commit to one franchise over another, be sure to ask the franchise company how much support they are willing to offer as a way to be of full assistance to your business. Even if you’d rather maintain a higher level of independence, you still want to know that someone has your back. Certain brands will be more involved than others and you can then decide how comfortable you are working with that company.
Any good business decision is made when you incorporate your own personal goals into the equation. Why do you want to start a business? What do you hope to gain from it? What skills do you bring to the table? What are your interests and where do your strengths lie? Asking yourself all of these things can help you determine how best to select a franchise.
Most everyone opens their own business to make money but not all businesses do that. Some take time to cultivate and evolve to a point where you are in the black, not the red. Many companies lose money in the first year or more, are you financially prepared to do that?
Is this a career or a hobby? Know that answer. It will also play into your decision in making the right choice of franchise to purchase. Certain companies allow you to reach your specific goals more readily than others and some self-reflection can play a large role in which franchise you ultimately select.
Ask your Fellow Franchisees
So you’ve done your homework and you may have whittled your choices down to a handful of options. But you’re still undecided which franchise is the one for you. Now is the time where you get some outside opinions from people who bought in before you.
Asking for advice and testimonials from fellow franchisees could be the final thing you need to sway you one way or the other. This is where you’ll hear both the good and the bad about the franchise company that you might join. Find out all the pros and cons that come with ownership.
Is the franchisor support helpful or non-existent? Has competition been difficult to navigate? Is the product or service you will be offering to the public something that people are actually interested in buying? Your fellow franchisees can give you a “day in the life” point of view on the routine operation of the business. That information may just prove extremely useful.