Becoming a franchisee presents a fantastic opportunity to launch your own business and feel the empowerment and excitement that brings; all reinforced by a solid support network and great brand reputation. There’s many benefits from running a franchise and becoming an entrepreneur in this way, but this doesn’t mean it’s for everyone or that it will bring guaranteed success for all.
When choosing to embark on a franchise venture, it’s important to ensure that you are well informed on what the business will entail, how best it could work and what your obligations and responsibilities will be. So what are the key considerations to make before investing? Read on for details on the key factors.
Your Passion.
There are now a myriad of franchise opportunities available spanning all industries and so it’s easy to get swept away in the variety of possibilities and invest blindly. However, this is rarely a route for success. Instead, it’s important that you care about what the business is selling/producing, and that it’s something you hold genuine interest in. If you can tie this in with a genuine passion or hobby, you’re much more likely to be able invest not just the finances, but also the dedication and drive required to make the business flourish.
Your Finances.
There is a common misconception that franchisees make their initial investment back quickly because the business is guaranteed to do well, but this is not the case without a large amount of hard work. Buying into a franchise is only one associated cost as you need to consider; there are also ongoing fees and costs, often a profit share to pay back as well as marketing costs, product ordering, uniforms and training expenses. Many entrepreneurs are unable to self-fund the initial investment entirely and so require additional funding through a business loan.
Your Way Of Working.
How you work best needs to marry up with the working methods of the franchise you’re buying into or you simply won’t find compatibility with the brand. If you like to be on your feet and working with customers directly, a public-facing role may suit you best; but if you’re the opposite, then you may need to consider an office-based franchise. You should also consider the amount of management you’re willing to accept from the over-arching brand – are they likely to give you the level of autonomy you need to thrive, or will you have to adapt to a lot of reporting and feedback?
Your Market.
Franchises are already well-established brands and businesses, often fairly well known to their target audience. However, this doesn’t mean that success is a no-brainer. Instead, consider your target market and build the franchise around them. Are there lots of competing brands in the surrounding area that will impact demand? Is there another established location of the brand nearby that customers may already favour? Is there any demand for the products or services being offered in the area? Are the products and services appropriate for the area? There often restrictions in place to limit the amount of competing locations, so check in with the franchisor to understand more.
Your Competition.
Aside from other locations of the same franchise, you must have a thorough understanding of other competitors the business will face. It is imperative that vigorous market research is taken ahead of time to scope out these other businesses and ensure that the franchise will be able to operate in a manner that can gain competitive advantage. Some franchisors offer specific competitor support and can adjust their brand approach to give the best chances of success and so this should be investigated into as it could prove critical.
Your Support Network.
The exact level of business support offered by franchisors varies hugely and it’s important to understand how reserved or active they will be in the daily operations of your business, as well as to know how they will react should you need additional assistance with something. This needs to be not just effective but also in keeping with the level of support you’d like and work well with. What’s more, out-of-work support is also valuable. Running a business is a demanding, tiring, time-consuming and stressful role, particularly in the early days, and so having great family and friends around you to support you through it is key.
Your Personality.
Running a franchise is different from running a business you own entirely and it’s not suitable for everyone’s personality. A key consideration before investing in a franchise must be your personality and how you will fit within the established brand. While franchisees are certainly just as much entrepreneurs as those launching their own brand, there isn’t the freedom across many aspect of the business that this brings you. If you are someone who would benefit from the support of a franchisor and happy to take direction to a degree, franchising could be the perfect opportunity – but if you like full control and know you’re likely to go off on a tangent, starting your own business from scratch may be more appropriate.
Your Employment.
Many franchisees choose to invest in a business they’ve worked for before, so that they already have a good idea of their working practices and values: and many franchises will only offer an individual the chance to buy in once they have worked with or for them for a set period of time. If you haven’t worked with the brand you’re considering before, it is usually a good idea to do so first to learn the realities of the company culture and brand. If this isn’t an option, speak to an existing franchisee to understand more and assess. You must also consider at this point if you intend to immediately work in the business full-time from conception, or if you will need to continue in at least a part-time role elsewhere. The former is absolutely preferred in order to give you the opportunity to properly focus on the new venture but is sometimes not realistic for financial reasons.
Franchises are interesting propositions but they should not be entered into lightly. Read, research and get a feeling for the brand before you commit to anything; and you’ll soon find the right fit for you!