You dream about having your own business and you've heard that opening a franchise is the safest option. Normally they have a respected name on the market, and you'll receive all the guidelines and training programs the company offers. But how do you pick the perfect franchise? Here are a few questions to ask yourself:
Which products or service I would be happy to deal with?
Many people choose their franchise only based in numbers. However, it is important to go for something you feel related to. If you hate pets, for example, you should avoid a business in this field just because the franchise is considered a success. You need to bear in mind that in the coming years you will have to be in that shop every day. Owning a business that has nothing to do with your personality is tough.
How much money am I willing to invest?
The cost of a franchise might surprise you. Known successful branches require investments in the mid-six figures to purchase. Be sure to do your research and see what's available within the boundaries of what you have to invest.
If your budget is under $10,000, you will probably have to stick with a home-based franchise. Without the need for an office or staff, you'll be bearing the brunt of the workload. Though you may put fewer dollars in upfront, you'll be contributing with blood, sweat, and tears.
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Are there ongoing costs?
It depends on the type of franchising you are opening and it varies so, so much. That's why it's important to check everything in advance with the company and ask a lawyer to read the contract. You need to consider the money you will have to invest, if you have to build the shop, and also if you need to pay for training, business licences, rent, supplies etc. Check if the franchisor covers the marketing and promotional expenses. Insurance, health coverage, and even storage fees can sneak up on you.
Where should I put my shop?
Choosing where your storefront will be is a crucial point. You need to analyse the neighborhood, your audience, real estate values, etc.. Is there the same franchise near by? Check with the franchisor if there are rules to open a second shop in the same region.
Am I ready to do all the accounting?
It is important to compare the average annual revenue and the investment. Are they compatible? Also, investigate further and try to find out the financial situation of your franchisor. A company offering inexpensive branches may be a dying brand.
Am I ready for a long commitment?
Normally a franchising contract is valid for five years. However, it is important to check it with the franchisor about the rules to renew the contract. It is important to have in mind that during this first contract period, you may not recover your initial investment. It may take a few contract periods to see a profit.
I'm in! Now what?
Once you have a franchise in mind, the second step is to visit their website and begin a dialogue. Check out regional franchise fairs hosted near you and, if possible, try to visit the International Franchise Expo. This annual event puts together more than 400 franchises and interested parties.
Don't be shy! Try to get in touch with people who have a contract with a franchise you are interested in. Talk to at least four of them and get a feel for their experiences.