Here are 5 questions to ask yourself to determine if opening a franchise business is right for you.
Buying a franchise can be a great option for entrepreneurs, but it’s not necessarily the best option for everyone. Here are five questions to ask yourself to help determine if owning a franchise business is right for you.
1. Are you willing and able to fully commit yourself to business ownership?
Although opening a franchise business allows you to bypass many of the struggles associated with starting your own business, it still requires a great deal of effort. The franchisor will provide a proven business model and immediate brand recognition along with start-up training and ongoing support, but you must be willing to put in the time and effort to make it work. Thanks to the tools provided by the franchisor, franchise businesses do have a higher success rate, but it doesn’t happen overnight. You must be willing to work harder than perhaps you’ve ever worked before, especially during the start-up phase to launch your business. It will also be up to you to grow it.
2. Can you adhere to the franchise guidelines?
Consistency is the heart of every successful franchise. Customers expect the same products and level of service from one franchise to another that operate under the same brand. This brand awareness and the power that it carries is one of the most important advantages of franchising. Thus, sticking to the franchise system and maintaining the brand identity are critical. To ensure you have a clear understanding of the products and/or services, technical systems and operational procedures that need to be followed, look for franchise opportunities that include extensive training. You must be willing to learn and conform to the franchisor’s operating standards to successfully duplicate their proven business model. If you’re not content to color inside the lines, owning a franchise may not be for you.
3. Will you enjoy the franchise?
Like Mark Twain said, “Find a job you enjoy doing, and you will never have to work a day in your life.” When opening a franchise business, think about what you like to do. Oftentimes, prospective franchisees gravitate to what they believe will be a profitable concept or bank on a sure-fire business model but fail to consider how much they will actually enjoy the experience. For some, capitalizing on a beloved hobby or interest is a no-brainer. But use caution going this route; turning a fun pursuit into a job could make it less enjoyable and ruin the hobby as well. Make sure you enjoy the activity enough to spend most of your time doing it. The initial term of an average franchise agreement is 5-10 years, which can seem like an eternity if you fall out of love with what was once your passion.
4. Are you a people person?
From collaborating with the franchisor and fellow franchisees in the network to dealing with vendors, employees and customers, a significant amount of your time will be spent interacting with others. Great interpersonal skills are a must. If you do not enjoy working with people and lack a track record of good relationships at all levels within an organization, franchise ownership may seem more like drudgery than a joy.
In addition to strong interpersonal and communication skills, you should also be a highly motivated individual. Striving for and attaining goals to continually improve your business, solving problems along the way and the ability to inspire and lead a team are extremely beneficial traits to possess.
5. Can you afford the franchise?
The cost of opening a franchise business varies widely from $10,000 or less to millions of dollars. Some franchisors even offer a variety of location types with varying costs to help fit the needs of their franchise owners. Before investing, thoroughly research all start-up costs and evaluate your financial resources. Keep in mind you will need enough money to not only open your franchise, but to cover operating costs and your living expenses as well, until your business becomes profitable. Depending on the franchise, that may take up to a year.
Under-capitalization is one of the major causes of business failure. It’s always a good idea to have more funds available than what you estimate you will need. Most franchisors have a minimum net worth and liquid capital requirement for their franchisees. If you’re short on cash, there are a variety of financing options available, but be wary of starting out your business heavily in debt. Some franchisors offer their own financing programs or discounts to help offset start-up expenses.
Thoughtfully answering these questions can help determine if owning a franchise is right for you. But the bottom line remains the same, if you don’t relish the thought of embracing a pre-defined blueprint for success and immersing yourself full-time into a business, then franchising isn’t your best option for spreading your entrepreneurial wings.