You’ve found a fabulous franchise and are eager to sign that
franchise agreement and start running your own business. But before you do, hesitate. After all, this is a major life decision, and you want to ensure it’s really the right fit for you.Before you close the deal, ask yourself the following.
What are My Goals?
Understanding what you hope to achieve with your franchise can help you ensure you’re on the right path. For example, if you’re looking for a lifestyle franchise you can run around your schedule taking care of your family, you’d do better with a home-based franchise than you would a restaurant franchise that would require more of your energy. If you’re looking to make a lot of money and spend as little as possible, you might need a franchise you can both own and operate, rather than hiring a manager to oversee operations.
How Much Will I Spend?
Beyond the initial franchise fee, you will have many expenses, both to get your franchise off the ground and then to maintain it over time. Be sure to see what the franchise disclosure document has to say about typical outlay to launch a franchise, but also build your budget for the first year, being sure to include your own salary as an expense. You won’t be guaranteed profitability right away, so you want to ensure you have enough to help your franchise succeed.
Don’t forget to factor in ongoing royalty fees, as well as merchant card processing expenses.
How Much Do I Have?
Knowing how much it will cost you to launch and run your franchise, consider whether you have enough capital to get started. If not, research which financing option is best for your needs. You might consider a small business loan, pulling from your savings, or franchise financing.
What Kind of Support Does the Franchisor Offer?
Consider buying a franchise as a partnership. You want a franchisor who is proven at being a solid partner, who will be available for you as you have questions or issues. After all, it’s in the franchisor’s best interest to help franchisees succeed. And yet every franchisor has different levels of involvement with franchisees. Talk to your franchise rep to understand what your relationship will look like once you sign the agreement.
Can I Do This For the Foreseeable Future?
Buying a franchise (or running any business, for that matter) is a bit like having a baby. It’s not just for the “right now,” but also for years down the road. Make sure you are committed to being a business owner long-term and have the stamina to continually work to make sure your franchise is a success. It’s often difficult and unrewarding work. Are you prepared?
Being able to address these questions is important for making sure that franchising is right for you.
Susan Guillory is the President of Egg Marketing & Communications, a marketing firm specializing in content writing and social media management. She’s written three business books, including How to Get More Customers With Press Releases, and frequently blogs about small business and marketing on sites including Forbes, AllBusiness, The Marketing Eggspert Blog, and Tweak Your Biz. Follow her on Twitter @eggmarketing.