If owning your own business is your concept of success and career advancement, buying a franchise can make starting a new business much easier. Starting something no one has ever heard of comes with its own set of problems, which you may be able to overcome, but what if you can’t? If you want to enter into a business that isn’t challenging or demanding, look at franchising. If your entrepreneurial spirit is stirred, this is a good time to learn more about the various business prospects available in the franchise world.
What is a franchise?
A franchise is any business that decided to sell the rights to its business models to other independent businesses and individuals for a fee. Thus, a franchise is like an identical branch of an existing business but opened in a different country. But, the rules apply and the franchisee, the one who bought a franchise, has to operate by the franchise operating manual and has to abide by the rules and procedures required by the franchisor.
Who can own a franchise?
Anyone who can cover all the startup costs, and ongoing costs like royalties, and other business running costs (accounting, legal services, etc.) can become a franchisee. All you have to do is find an available franchise and start the process. Each franchise is different, so you’ll have to do some research before you find the one you wish to invest in.
Seven Tips to buy a franchise
Do your research
You should commit to doing thorough research of business opportunities and read the fine print twice. Yes, you are getting into an established business, so there aren’t as many risks involved. But, you still need to do your research to learn about all opportunities, the competition, whether the location is fixed, or you get to choose a location and all ongoing costs plus the initial investment. You have to know everything there is to know so you’ll ask the right questions upon discussing the franchise with the franchisor.
Narrow down your options and consult with a legal team
After doing your research, you’ll come up with several possibilities. Now, you have to narrow down your choices, request an info pack from each franchisor and consult with your legal team. You need to get a professional opinion from someone who is an expert in franchising and franchising rules and regulations.
You have to understand exactly what you’re buying into, what rules apply and what your options are. Since each franchise agreement can last between five to twenty years, do your homework and learn everything you can about your commitments and other obligations required by the agreement. This will also help you have a better understanding of the financial gains of each franchise opportunity.
Evaluate the franchise
Do your homework to evaluate the franchise. For example, if you’re interested in a bubble tea franchise, look at the number of franchises in the country. Check to see if this type of franchise is an award-winning business, and how else it stands out from other franchise businesses available to you. Evaluate the level of support. For example, a good franchise prospect is a franchise that offers comprehensive training and full ongoing support once you start your business. Look for those that will negotiate the lease for you and other amenities that set them apart from other business opportunities out there.
Meet with the representatives of a franchise
Just like you’re expected to pay a hefty sum to buy a franchise, you’re entitled to know what you’re getting into. So, take your time to meet with the representatives of a franchise and discover all you can about the business opportunity. See if you can test the product, or a service to help yourself during the decision making process. Ask the right questions to vet the organisation, the product, and the service.
Evaluate yourself
Next, turn inward to evaluate your level of interest and commitment to this type of business. Are you even interested in running a popular franchise? Does this type of business excite you? Do you have any knowledge needed to be successful in this line of business or do you have to invest in professional development? These and similar questions can help you find your why and how willing are you to do the work necessary for a franchise to be successful. Not only that but do you have what it takes to adhere to the rules and obligations defined by the franchise agreement.
Learn about the franchise from a first-person experience
Sometimes we have to get behind the scenes and talk to a person running the show to learn everything we can about something. The same applies to opening a franchise, the best experience is the one that comes from people doing what you want to do. Ideally, you should seek a franchise owner of the franchise you want to buy into. If franchise owners aren’t forthcoming, you can talk to another franchise owner. The idea is to learn from another person’s experience and be sure that you’re making the right decisions. You’ll learn things like the realistic timeline, issues and hurdles you might face and even how to overcome them.
Write down the list of pros and cons
Evaluating all the possibilities, both positive and negative before making the big decision, can help you make the right decision. Consider this as a psychological exercise that helps you decide any aspect of your life, not just your professional life. Write down the pros of opening a franchise and list out realistic cons as well. If it’s a con, try to list out a way you can turn this into your benefit or at least how it might affect you.
If you’re serious about buying a franchise, but you needed some guidelines, these seven tips will point you in the right direction. Remember to take your time and think through your decisions. Since you’ll be expected to commit to a franchise for at least five years, make sure it’s the right decision.
