TOP 5 Things to Know Before Starting Your First Franchise Business
“Once you find something you love to do, be the best at doing it." - Debbi Fields
BEFORE BUYING YOUR FIRST FRANCHISE AND START A FRANCHISE BUSINESS, HERE ARE SOME THINGS YOU SHOULD CONSIDER.
If you are a person that likes risk, an entrepreneur that is looking for a fast-track to success, but want to start a business that comes with an established brand and business model, investing in a franchise business is a very popular option that may be worth looking into. And when I say "looking into", I really mean dig really deep down and make sure you know what you are doing. Take your time. See what's out there and find our what adjusts to what you are looking for. It is important for us to note that even if many people are interested in start a franchise business, we have different objectives. We all have the same (or almost the same) personalities, but we are looking for a different outcome even if we are going in the same direction. What I mean by this is that even if we all are interested in the franchise world, not all of us have the same reasons.
"We are all looking for a different outcome even if we are going in the same direction"
Buying a franchise business is a trend, we are changing and some of us want to jump to a boat that is already built and navigated. And it is AMAZING, but, as anxious as we are of making things happen and make it happen quick... we have to take it easy, and as cliché as it may sounds, take BABY STEPS!! If you buy a franchise on a whim, without thinking and actually analyzing what you will be doing you will suffer later instead of enjoying the adventure up to the fullest. A person that buys a franchise needs to have much more reasons than "Oh, I find the franchise's product very interesting!" or "It would be a nice thing to try. Those answers are great because if you have no interest or are not willing to try these kind of project you would not last in franchises world. No offense to the ones that give these kind of answers but... from my point of view, that is not the best foundation on which to start any type of business. A franchise can be the road to a great lifestyle and a very comfortable living if you do things the right way, and to do so, you just have to make sure you ask the right questions first.
Here goes a free not-included question on the list below but the most important one.
WHAT IS A FRANCHISE?
I was looking for a fancy definition on the internet so when you read this you would make a WOW! face, but then decided that's not me. So, I found this definition in a HubSpot blog which I really liked. "A franchise is a contractual relationship between an individual (franchisee) and a business (franchisor). The contract allows the franchisee to distribute the franchisor's product and use its name and brand."
If you have that clear, we are good to go!
TOP 5 things to consider when buy and start a franchise business.
The following list was made from my point of view, these options are NOT ordered from most to least important, that depends on the point of view you want to see it from and the goal you are aiming to reach. I also want to point out that there are many other reasons and questions you should ask yourself and others, but notice these are the key questions for me.
In my opinion, this is one of the most important thing to consider. Before even thinking about the next steps, you have to analyze. Find out if there is a demand for the product or service you will be offering, if its recurrent, or if not, how much will it "last." Before jumping you should analyze the potential for expansion of what you will be selling.
You need to have things clear, will the franchise continue growing? Is the expansion done and you are not looking for any future branches? Is it stable? Is the road the brand is taking the road you want to jump into? Why? Make a pro's and con's list on a piece of paper and give yourself some time to think about it. NO RUSH and think what it is what you want.
2. How much will it cost?
Even though you have already a business model and some guidelines, be ready for a bumpy ride. Getting a franchise up and running may involve the need to survive on break-even and a period of net losses before you get on track. The financial model is attractive no doubt, but you have to see the best and worst case scenario.
It is recommended for you to have access to capital that will cover both, business expenses and personal living expenses for approximately six months. It is true that the franchisor already gave you the success plan, but it is up to you to make it happen or not. It is up to you to make your first franchise work. My advice is for you to have some pocket money so the ride is not that bumpy.
3. What type of personality do you have?
Being a franchise owner is not for everyone, if you are a creative, bold person that does not follow rules and cooks without recipes...This is not for you. I am sorry to tell you this, but in the franchise world, there are always rules to follow. It is your job to make things happen, to get the franchise running, BUT doing this following other's guidelines. You will run the place, we could say you are the implementor, but not the creator.
If you don’t generally follow the rules, don’t buy a franchise. It could turn out ugly!
4. How much time do you need to invest?
Franchise gives you a ready-made business system, but you still have to do all the everyday work that running a business involves, such as ordering supplies, hiring employees, being in charge. Having everything in order its on you. So, don't think you will be sitting on a couch and making money out of doing nothing.
There are seasonal franchises that require you to work especially hard at certain times of the year; but it is still your business that you're going to be running, and you need to be clear about how much time you will need to invest to make it a success. And my advice to you is, for anything to make a success, you need to be constantly working on and thinking on improving it. You can always do better. It is never enough.
Make sure you understand the rules. It needs to be clear that this is not entirely your business, you should be comfortable with doing things "by the book", it is normal for the franchisor to expect from you to do things following the procedures rather than doing things your own way. What I am trying to say here is that you may be the boss, but the franchisor has the control. It is very important for you to understand this and know if you are able to handle this kind of agreement.
In the end...
In the end it is up to you, the most important quality you need to have is attitude. It is of high importance for you to know what you will going to do and knowing the territory you will be stepping into; but the thing I really want for you to take out of this article, is DO NOT RUSH!! Take your time to analyze, to think, to get some answers from the outside and from the inside. Relax. And after doing all of this, you will make the right decision and you will succeed.
Below you will find a 5 minute video that visually explains the functionality of a franchise. I enjoyed watching it and I hope you enjoy it as well! Even if I just wrote this article, I believe it is always best to have as much information as we can to make an important decision.