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Are you dreaming of becoming your own boss and feel that owning a franchise is the best way to go?
If so, you're in the right place!
I'm going to share the three most important things you need to know about owning a franchise. The things that will help you make an informed decision on buying the franchise of your dreams. After all, that’s what you want, right? Let’s jump in.
1. Franchising Is Not a Guarantee of Success
One of the biggest misconceptions about owning a franchise is that it's a practically guaranteed path to financial success.
That’s because franchises are a proven business model that includes access to things like:
- Proven marketing strategies
- Extensive training
- High-caliber technology
- Ongoing franchisee support
- Branding
And while these things are all well and fine, a lot of the things that increase your chances of success need to come from *you*.
Here’s what I mean.
A. Your Effort Matters
Owning a franchise business requires an extreme amount of focus, lots of hard work, plus a willingness and ability to follow and use the established system the brand has in place.
In other words, much of your success will depend on your commitment to the franchise business concept you decided to go with.
Another way of saying this is you’ll need to live and breathe the business.
B. Doing Local Market Research is Essential
Even though you're buying into a proven concept, it's essential to conduct thorough local market research. You need to determine if there’s a market for the things your franchise business provides.
But how do you do it?
One way to do it is to contact a Small Business Development Center (SBDC) near you.
What is an SBDC? From the SBA: “Small Business Development Centers provide counseling and training to small businesses including working with SBA to develop and provide informational tools to support business start-ups and existing business expansion.”
Additionally, the – mostly free – assistance they provide, especially when it comes to selecting a location, includes supplying all sorts of important data and information about your local market area.
C. Your Financial Preparedness Matters
You must be financially prepared for your startup costs and ongoing expenses. Hint: more money is better.
That’s because, unfortunately, many prospective franchisees underestimate the ongoing investment required to keep the franchise up and running.
In addition, some incoming franchisees have unrealistic expectations about the time it takes to start making a profit. That’s where solid and realistic financial projections come in.
2. Due Diligence is Key
Before you dive into franchise ownership, you need to undertake serious due diligence.
With that in mind, here are some of things you need to focus on during the research phase of choosing a franchise to own.
A. Research the Franchisor
You need to investigate the franchisor's reputation, financial stability, and long-term track record.
How do you do this? By contacting current and former (if possible) franchisees to gather insights about their experiences with the franchisor and their own franchise businesses.
B. Visit Existing Franchise Locations
If possible, make arrangements with one or two franchisees to visit their businesses in person. I call it "Spending a day in the life of a franchisee." This possibility is aided by a list of a franchisor's current franchisees being provided in the franchise disclosure document you will receive during the due diligence process.
The visit is the best way to see the business in action, ask questions of the franchisees/employees, and get a feel for the business you’re thinking of owning and operating.
C. Seek Professional Advice
That means consulting with professionals, such as franchise lawyers and accountants who are familiar with small business.
And please note, doing these things aren’t free. Consider them to be an investment in your future.
For example, a franchise attorney will go through and explain all the required legal documents the franchisor sends you. And an accountant can go over the figures and help you create your financial projections, both short-term and long-term.
3. Your Fit with the Franchise Concept
It’s crucial to choose a franchise that’s a good fit for you. Here are a few factors to consider.
A. Belief in the Product/Service
You can’t fake your love for the product.
That means you need to choose a franchise that offers something you genuinely like and believe in. That’s because doing so will show. Potential customers will feel your passion and feel more confident about doing business for you.
B. Your Skill Set Needs to Match Your Role as a Franchisee
You’ll need to assess your skills and strengths to determine if they match.
One way to do that is by asking the franchise representative at headquarters what skills their top-performing franchisees possess.
In addition, you can ask existing franchisees what they feel their top skills are, and if they’re a good match for the business.
C. Lifestyle and Goals
Ensure that the franchise opportunity you’re interested in owning matches with some (or all) of the things you want to have in a business, lifestyle wise.
For example, perhaps the demands of your last job caused you to miss a lot of your children’s activities. Like dance recitals, basketball games and the like. And you’ve decided that you don’t want to miss those memories this time around.
The solution? Choose a franchise opportunity that will provide the flexibility you need to participate and enjoy the important things in life.
To conclude, owning a franchise can be a rewarding and profitable endeavor, but you need to choose carefully.
For one, you need to come to the realization that there’s no guarantee of success. Secondly, you need to understand that best way to increase your odds of success is to perform thorough due diligence on the franchise you think you’d like to own. Third, when it comes to the lifestyle you want need to have, make a commitment to yourself (right now), to only explore franchise opportunities that offer that lifestyle.
You’ll be happy you did.
The Franchise King®, Joel Libava, is a top franchise expert. He’s written over 2,000 different articles on franchise ownership and personally consults with people who are looking to buy a profitable franchise. Go here to find out how The Franchise King® can help you become your own boss.