If you are one of the millions of Americans currently...
Most of us dream of striking out on our own as entrepreneurs, but why should we choose franchising as our route to success? Franchises are based on tested and proven business models, which means that their operations and products are already working successfully in the market. This vastly improves the likelihood of success and gives far greater security than with many independent start-ups.
Once you’ve decided that a franchise is the route for you, now is the time ask ‘What are the characteristics of a good franchise?’ Buying a franchise is an important decision that should be taken after a lot of thought and consideration – and homework! First you will need to consider whether you want to build up your new business part-time to start with or go all out full time. There are a range of part-time franchises that allow you to ease into it and make the switch if and when you’re ready to go full-time. There are even franchises that you’ve maybe never considered before – ones in growth areas, specialist areas as well as through the internet. New franchises are emerging all of the time. The first thing to do is look through the listings of franchises available and be inspired! Don’t be put off if you think you lack experience or professional qualifications. Skills gathered in the course of one’s life are often transferable to other industries with suitable franchisee training.
Once you’ve got your shortlist, it’s time to get serious with your research. When you take up a franchise you’re entering into a long term business relationship and it’s important to spend some time looking into the background and performance of your prospective partner. You will need to evaluate whether a particular franchise is worth investing in. Analyse the industry, see whether it’s stable or growing and does it match with your long term plans? Does the franchisor have a proven track record? Is there a market for the products or services on your chosen area and what is the future market likely to be? Contact the franchisor and get as much information as you can. A good franchisor is always willing to undergo scrutiny and supply information.
Attend a Franchise Show exhibition, where you can meet the franchisor development teams and ask them questions about your future relationship with them and where you will be to determine what their initial and ongoing training involves and what guidance you will receive on running a franchise operation.
The next steps are to consider the legal and financial implications of the franchise contract. This document will be legally binding once you’ve signed it, so it’s important to be clear about it. Ask for a copy well in advance. It is strongly recommended that you obtain independent legal advice from a solicitor with experience in franchising agreements.
Assuming you wish to proceed, the next step is to examine the financial aspects of the franchise. This falls into two categories – the ‘start-up’ costs and the potential income/profits. It is important that you identify the total amount of ‘start-up’ money required, including any working capital needed. Will it require borrowing? Having established the start-up costs and possible borrowing requirements you will then need to look at the potential earning power of the business. Will it justify the level of investment and can you recover your investment?
A franchise is likely to be a very important and major step in your life and it’s important to be realistic and get as much professional advice as you can. Read the advice from experts on the FranchiseExpo website
And above all, be excited and inspired about the successful future that lies ahead of you as a Franchisee!