September 8, 2014
People choose to buy into a franchise for many reasons. Some seek the freedom of owning their own business, but rely on the security of choosing a business model with a standing history of success and proven track record. Others are inspired by the local chain of donut shops in the neighboring city and decide to bring it to their neighborhood.
Whichever reason sparked your desire to embark on owning a franchise, you need to ensure that the franchise will serve your needs and fit your lifestyle.
If you have already settled on a specific franchise, odds are you chose it because you were passionate about the product or business model. You found a little restaurant or doggy daycare in another region and are itching to bring it to your city.
But not everyone decided to buy into a franchise after they were blown away by a specific business. Many, if not most, franchisees rather decide they want to own a business and then determine which franchise will best fit their needs.
This means you are able to analyze your passions and motivations and then choose the franchise that best allows you to express them.
There are three main areas that you should consider during your research process.
You have an incredible passion around cupcakes. Or fashion. Or mechanics. Whatever it is, there is a passion there and you need to be inspired by the industry you are in or the product you are selling.
Recognizing your specific passions will help narrow your search dramatically, moving you quickly to the vetting stages.
You want to own your own business to better control your schedule. Whether you are looking to not work weekends, or have the flexibility to hit volleyball matches and baseball games during the week, you are motivated by the ability to control your schedule.
Identifying the type of schedule you are looking to maintain will help remove potential industries. For example, if you don’t want to work weekends, retail may not be a good fit, Restaurants need managers during the busy hours in the evenings and Coffee shops require early mornings.
There are many 8-5 type franchises, as well as service based or online ones that provide more flexibility over your schedule. Weed out industries that don’t match your needs.
Everyone goes into business with the desire to earn a comfortable living, but this is your driving motivation. You aren’t motivated near as much about what types of products you sell as much as the earning potential. You are here to provide for you and your family.
Without the restrictions of product time or maintaining a specific schedule, you have the freedom to research the franchises that have the highest earning potentials.
No matter how you weighed each of the categories, identify the key driving forces behind your desire to own a franchise. Like with every business, there will be ups and downs in your business. And your motivations will help you get through the rough times and back into the successful ones.
Determine the driving force behind your desire to own a franchise. Your key driving force will have to work with the franchise you choose, because like with every business, there will be ups and downs
No matter the driving force behind deciding on a franchise, some element of your decision is to make an income. It is important to evaluate the cost of every potential franchise against the value of the business model.
Not only does the franchise need to have a record of success, developing enough income to survive after royalties, but it also needs to stand on its own as a good investment. That includes recuperating the initial investment, which most times ranges in the $125,00-$250,000.
What exactly are you getting in exchange for the franchise fee and royalties? Typically you will be receiving a recognizable brand, solid operations manual, marketing materials and a support team. By evaluating this based on your ability to do it on your own or against other franchising models will help determine its worth. Lastly, it needs to make economical sense for your financial situation. If your resources are extremely limited, combined with a family relying on your income, you will be looking for a franchise with a lower start up cost. Don’t be dismayed, because of the sheer volume and variety of franchises available today, you can start a franchise for as low as $10,000. Especially for franchises not needing brick and mortar locations, there are many great lower cost options.
When evaluating your financial position, make sure to account for the 3-6 months that most businesses take to become profitable.
Where you live dictates which types of businesses will be successful. Regardless of your passion for surfing, if you live in Oklahoma a surf school is not going to survive. Become an expert on the types of businesses and markets doing well in your area. Towns driving the movement behind organic, locally grass fed and vegan may not welcome a new fast food burger chain.
If this is a new type of business to your area, such as a dog obedience school, learn about your potential customers, the volume of people living in your city with dogs and their likelihood to utilize obedience skill services services. Do intensive research on market potential in your area.
Location plays heavily into a business’s success. Some businesses, such as 7-11 can still thrive even with another 7-11 or gas station 3 blocks away. Other businesses, such as yoga studios or skate shops may struggle immensely when immersed in a competitive market.
Depending on the size of your hometown, this can be fixed as easily as choosing a prime location with a calculated maximum distance between you and the competition. For those in a smaller town, be honest about the amount of business needed to support multiple car washes or daycares.
Owning a franchise can be an exciting new opportunity, allowing you the ability to own your own business while utilizing the support and guidance from a franchisor. Whichever franchise you decide on, make sure to do in depth research on the track record and ensure it aligns with your lifestyle.
If you are interested in franchising your business or becoming a franchisee please contact me today for more information.