Running your own business is not easy, much so if you are just starting up. You literally start from the ground, and there is no guarantee that you will succeed. On the other hand, a franchise is easier and more convenient to operate. You pay the fee and get things started. With the company’s proven track record, it is safer to invest in this kind of business. However, not all types of businesses are made for everyone.
Here are some things that you must know and do before owning a franchise:
1. Assess yourself.
Your business starts with you. Know the kind of personality that you possess. Are you people-oriented, success-driven, a born leader, or a follower? What are you passionate about? Choose the industry that best suits your personality, not the one that will give you more profit. Select the franchise that you believe in and proud to be a part of.
2. Know your franchisor.
Do research on the company’s track record — success rate, revenues, products, or services offered, and the number of years in the business. It is extremely important that you know the people behind the company. Gather as much information about your franchisor executives.
3. Talk to franchisees.
Talk to current and former franchisees. Find out how long they have been working with the franchisor. Ask about the ups and downs of running the business, the support they receive from the headquarters, the return of investment, and lessons learned from the experience. Insights from their experiences will guide you in deciding whether to get a franchise or not. Make sure to talk to as many franchisees as possible before you finally make a decision.
4. Define your total investment.
Establish your budget and know your financing options. Go beyond the franchise fee, cost of equipment, marketing costs, and working capital. Admittedly, it may take years before your business gain profit. Have a clear view of how to handle break-even situations, net losses, and personal living expenses during that crucial period.
5. Know what the franchisor provides.
One reason why more people opt to own a franchise is the support that one can get from the franchisor. As a franchisee, you will be given the necessary manpower, technical, and nontechnical support. However, when things go wrong, it is important to know the extent of support that your franchisor can provide. Make sure that they will still give you the resources and expertise that you need. For instance, one lucrative business is fast food. When choosing one, opt for the company that offers the best fast food franchise opportunities.
6. Go over the Financial Disclosure Document.
Read through the Financial Disclosure Document or FDD. This document contains essential information about the company, training it offers, hidden fees, expenses, and bankruptcy issues. Do not commit to buy a franchise without reading this document thoroughly.
7. Seek professional advice.
Never sign the contract if certain parts seem vague. Ask a lawyer concerning legal issues or an accountant to discuss your financial concerns.
Many aspiring entrepreneurs consider owning a franchise because it is viable, sustainable, and profitable. After a thorough assessment of yourself, knowing your franchisor, speaking to franchisees, preparing your finances, reading the FDD, and consulting the experts, it is safe to say that you are finally ready to invest in a franchise business.