đź•’ Estimated Reading Time: ~4 minutes
Franchising is a popular method for starting a business. It can provide an entrepreneur with the ability to start a business without needing to invest in the full cost of the business. As a franchisee, you also have access to established branding, marketing materials, and distribution channels.
Before getting into franchising, you should ensure that you have the right skill set and are passionate about entrepreneurship. You need to know how owning a franchise works and be comfortable with risk-taking, too. So let’s look at four key steps to take before deciding to buy a franchise.
#1. Imagine Your Future
Franchise investing is one of the most popular ways to obtain financial freedom. Before investing in a franchise, you should evaluate your financial situation and decide what level of risk you are willing to take. You should also outline your personal goals for the next 5-10 years. Some franchises will take longer to build than others, and your retirement, travel, or personal needs must be an integral part of your decision-making.
Close alliances get a voice, too. Spouses, children, potential partners—each has a stake in your decisions to work weekends and use retirement funds to get started. And don’t forget the inevitable exit from the business, too. The day will come to close or turn over the reins to another operator, and that event demands a vision into the future.
#2. Evaluate Your Passion and Skill Set
As a franchisee, you have the opportunity to build upon (and expand) your skill set while working in areas that interest you. Reflect honestly on your strengths and weaknesses to understand which franchise options might make the most sense for you. What do you enjoy? What management responsibilities do you avoid? You probably won’t have every skill set necessary initially, but that’s why franchising could be the perfect answer for your entrepreneurial dreams.
You might imagine a hands-off role or determine that you prefer to be the owner-operator who does everything, from orders to accounting to deliveries. No matter your preferences, you can find a satisfying franchise. With training and support from your franchisor, your passion and skills combine for greater success.
#3. Quantify Your Investment and Risk Level
A lot of research goes into selecting a good investment opportunity. If you want something with a low-risk level and a small investment, then perhaps a franchise with lower investment requirements is right for you. On the other hand, if your cash holdings allow for a bit more risk, your franchise options expand. Remember that a franchisor often requires up to two years of working capital from day one and that you still need to pay your rent and put food on the table as you build your business.
#4. Ask Advice (from Everyone You Can)
Talk to current and former franchise owners for advice. Ideally, seek out those who already own a similar franchise to ask about the management team, franchise fees, marketing support, and training. Be sure to ask for a couple of negative stories, too; they might not dissuade you, but a story of a franchisor challenge will help prepare you for inevitable bumps in the road.
Don’t let the actual management team off lightly, either. If you buy into a franchise brand, these people will be our new partners in your livelihood. It is a marriage that will have challenges, and your assessments of these individuals are critical for your ongoing collaboration.
Franchising opportunities abound, and there is one (or two!) that will meet your personal needs and comfortable investment levels. Ask questions of yourself, your life partners, and your prospective brand representatives to understand what is best for you. Then take the steps toward your future franchise success.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.