First of all, not everyone is cut out to be a franchise owner. Anyone who wants to run their own business typically wants a certain degree of freedom to make decisions and call the shots. Franchisees, even though they own their own businesses, must be able to follow rules and run the business by the book, an “Operations Manual” which details all business procedures.
These rules could range from to how to slice the rolls in a fast food restaurant to how fast an oil change must completed at an auto shop. If you are the type of individual who likes to give orders, but are not receptive to following them, then buying a franchise is probably not a good idea.
How do you know if you would be successful as a franchise owner? What are the factors that influence your prospects and future success in running a franchise?
Here are some tips for success for potential franchisees:
1. Try to match a business to your own interests.
Take a clear-eyed look at yourself to identify your true strengths, talents, and limitations. If you love the outdoors, then a yard care franchise would probably suit you better than running retail store. Think about your personal habits, your daily schedule and what kind of hours you want to keep. Are you a people-oriented person, a numbers cruncher, or more of a hands-on action-oriented individual? Match your own temperament and talent to the type of business you want to undertake.
2. Set specific goals for yourself
Where do you want to be in five years, then ten? Which is more important – job satisfaction or making money? Create a roadmap for the future so that you can get a realistic sense of whether a particular franchise can get you where you want to go in terms of financial status and pride in personal accomplishment.
3. What are your family commitments and physical limitations?
Do you want to be available evenings and weekends or can you work then? Do you have the energy and stamina required for long hours of physical work or are you better in a sedentary position? These are key factors for success. You don’t want to sabotage your family and personal relationships or health because of the demands of the business.
4. Get a clear understanding of your financial situation.
Do you have enough resources to pay the initial fees and then survive the start-up phase? Do you have fall-back savings for unexpected setbacks? Examine your assets in terms of how much you can risk. What is your credit history and will be able to get business loans based on your assets and history? What collateral can you use for loans? It is essential that you work with an accountant experienced in business ownership and financing, and preferably, an accountant who is familiar with franchise financing and agreements.
5. Review the UFOC word for word with your accountant and a business lawyer
Review all legal business documents with an experienced accountant and lawyer with business contracts, especially franchise agreements. The UFOC should spell out everything in terms of financials and business management, and the final Franchise Agreement should match what is detailed in the UFOC. Scrutinize both with your accountant and lawyer. Be sure you understand all the financial implications in relation to the issues outlined in #4 above.
These are the five critical areas that will influence success for any prospective franchisee. Obviously, there are many other details to consider, but these five elements make up the foundation upon which your success as a franchisee depends.
For more information on starting a franchise, see Guide to Buying a Franchise.