Owning a Franchise: How to Determine if Owning a Franchise is the Right Fit for You
Owning a franchise presents an exciting opportunity for both new and experienced business owners. A franchise is a unique business model that differs in some key ways from independent business ownership. If you are thinking about purchasing a franchise, there are a few things to consider. Here are some ways to determine if owning a franchise is right for you, along with some considerations to help you find the perfect business match.
Your Overall Fitness as a Franchisee
Before deciding what kind of franchise you would like to own, you should first consider if owning a franchise is right for you. Franchises offer a distinct business model: in exchange for some initial fees and continued royalties, you get to operate using the franchise’s brand while receiving training and support from the franchisor. It is often said that “Owning a franchise allows you to go into business for yourself, but not by yourself.”
- Are you willing to adhere to guidelines? Brand consistency and uniformity is what makes a franchise work. Customers expect a consistent level of quality and service at each franchise location. In order to ensure this customer experience, franchises articulate rules in handbooks and training programs. Adhering to a franchise’s policy requires a willingness to follow rules, relinquishing some decision-making, and a readiness to accept feedback and direction. Like any business, managing the day-to-day operations of a franchise is up to you.
- Are you willing to learn new skills? A franchise’s proven system also means that you will receive training and support that traditional business owners do not have. This can be a great opportunity if you are willing and able to learn new skills. Owning a franchise also means that you are not completely alone as a business owner; you have an experienced corporate support system and a network of fellow franchisees to assist you with any issues you may have.
- Are you able to pay upfront costs? As with opening any business, starting a franchise requires some upfront costs. In addition to a franchising fee, which allows you to use the franchisor’s trademark, you may have to pay for normal business costs such as inventory and a lease. Fortunately, obtaining loans for a franchise is often times much easier than obtaining loans for a completely new independent business. Since over 90% of all franchisees are still in business after five years, lenders can see proof of a tried and tested, profitable business. In a broader sense, opening a franchise comes with significantly less risk than opening a completely new business, as customers who have been to another operation will be more inclined to visit yours.
Choosing the right type of business
Once you have decided that owning a franchise is right for you, you have to determine which type of business you would like to run. Since there are thousands of franchises offering all kinds of businesses and services for you to choose from, narrowing it down can be a daunting, yet exciting, process. Here are a few criteria that can help you find the right type of business for your franchise:
- Skills, experience, and personality. One of the key ways to ensure your success as a franchisee is to make sure you are a fit with the company in terms of professional skills and personality traits. Consider your experience, interests, goals and abilities. If you are passionate about or professionally familiar with a particular product or service offered by a franchise, you will most likely make a great fit.
Some franchise businesses, such as auto repair or tax preparation, might require technical experience, special training or education. Running a restaurant franchise may present a challenge if you do not have a background in the restaurant industry. However, the vast majority of franchises do not require specialized skills or knowledge beyond the training they provide; they simply require you to be an effective manager and business owner with entrepreneurial ambition.
Some other considerations can help you find a fit in terms of personality and skills: Are you more interested in providing sales or service? Do you like to work directly with customers, or do you prefer to operate behind the scenes? Figuring out the answers to these questions can help you find the right franchise.
- Budget and income. Initial startup costs can vary from franchise to franchise, so thinking in terms of a budget is another good way to narrow down a list of potential franchises. Consider how much you are willing and able to invest in your business. Some franchises may require a higher initial investment if they involve a large amount of inventory or equipment.
When thinking about costs, it is also important to consider your income needs. Do you need a specific minimum annual income in order to meet your goals and needs? Fortunately, a franchise’s historical earnings can be used as predictors of potential income.
- Level of work and responsibility. Even though franchises offer a proven system, running a franchise can involve some hard work. Operating a franchise may mean covering advertising, accounting and hiring, among other duties. A franchise with less brand recognition may require more work to bring in customers.
Thinking about your lifestyle and personal goals can help you to narrow your franchise options. Are you looking to make money, spend more time with family or have a new experience? How many hours are you willing and able to work? Would you rather be an absentee owner and hire staff to manage the business, or would you rather be an owner-operator directly involved in running the business? Some franchise businesses may be more conducive to your particular desires.
- Geography. A franchise may require you to operate in a certain geographical area, and you most likely have your own location preferences. Is the franchise operating in your area of choice? Would the franchise be successful in your area? You can consider local consumer tastes and needs as well as any competition in your region.
Contact a Transworld Business Advisor
Finding the right franchise takes a lot of research and self-exploration. If you would like to start the process of finding the right franchise for you, contact a trusted Business Advisor such as Transworld. From helping you to determine your fitness as a franchisee all the way to assisting you in purchasing the perfect franchise, Transworld’s experienced, expert franchise consultants will provide you with the guidance, information, and support you need.