If you’re considering a career change and are thinking of going the entrepreneurial route – good for you! Becoming an entrepreneur is an exciting but also a daunting prospect. However, taking the leap to become your own boss doesn’t have to be overwhelming. All you need is confidence in yourself, and to also do your homework on what it’s really like to become an entrepreneur. Buying a franchise can be a good move for would-be entrepreneurs who want to work for themselves, but don’t want to create an entire business model from scratch. When buying a franchise, franchisees acquire a business model that already works on every level, from marketing to operations. That’s why franchises are so popular with many people who are looking for an opportunity to have their own business, but also want the support of an established company. Yet before you look into opening a new franchise, there are a few things you should take into consideration. Here are 8 things to consider when you’re thinking about buying a franchise.
1. Is there a consumer demand for the product or service?
Before you buy a franchise, you need to do your research and consider whether there is a consumer demand for the product or service you’ll be selling. It’s also a good idea to look at the competition too – what does the competition look like locally and regionally? How does the franchise you’re considering compare to the competition.
2. What does the business’ track record look like? Is the model successful?
It’s important to ensure the franchisor’s business model has been proven and that they can provide you with data to back up their claims. It’s also a good idea to look at the success of the franchise in your area (if there is already one set up). What is popular in one city or region might not necessarily work in another.
3. What are the costs associated with buying the franchise?
Whatever industry and franchise you’re looking at, the franchisor should be able to tell you the total cost of setting up the franchise. This includes upfront costs that come with purchasing the franchise, and the forecast cost for the first few years. Some other costs you’ll want to account for include things like rent, utilities, legal, accounting and liability insurance.
4. Does your personality suit the lifestyle of a franchise owner?
As a franchise owner, you will be involved in every aspect of the business. You’ll be involved from things like bookkeeping to customer service, marketing and social media and beyond. Of course the franchisor should be able to help you with some of the above, yet for the most part, as a franchise owner, you’ll be wearing many hats so you’ll need to feel comfortable with this idea.
5. How do current franchisees feel about the company?
It is a good idea to talk to people who are already franchisees as they, more than likely, can answer most of your questions. It’s important to remember that the feedback you receive from current franchisees might not necessarily be the exact experience you will have. However, their experience working with the company will more than likely be quite similar to the one you’ll have.
6. What kind of support will the franchisor offer?
It’s important to consider and ask the franchisor about the kind of support they will offer you as a franchisee. What kind of marketing, advertising and technical support do they provide? Does the franchisor handle the market research? Do they conduct annual surveys to better understand their customers and is this research available to franchisees? Some franchisors are very hands-on with their franchisees, while others take more of a back-seat approach. Whether you’d like regular support from the franchisor or prefer they give you some independence, it’s important to ask questions upfront to find out their level of involvement.
7. Do you have the right skills for the franchise?
Consider your skills – both personal and professional. Knowing what your strengths and skills are will help you when it comes to deciding if this particular franchise is the right fit. For example, if you’re not comfortable being around people all day, then working in a job when you are constantly facing clients might not be the ideal job for you. Ask your friends and family for input about your strengths and weakness. It’s important to make sure you choose a franchise that will benefit from your strengths, and one that you’ll enjoy running.
8. What are the legal bounds of the franchise agreement?
Before you sign on the dotted line, it’s important you comprehensively read and understand the contract. Even if you are engaging a lawyer you must also understand what is included in the contract and if anything feels off or there is anything you’re uncomfortable with talk to your lawyer about your options. If you feel any pressure from the franchisor to sign before you’re ready, this is a massive red flag! Investing your money into a franchise shouldn’t be something that’s taken lightly so it’s important you feel completely comfortable with your decision before signing anything.