So. . . you are thinking about either starting your/a new business from scratch, or possibly upgrading an existing business to take advantage of the benefit side of franchising such as possibly better advertising opportunities, better supply of goods for sale, name recognition. . any or all of the above.
The attractions and benefits of the better known and reliable franchises are many.
But as is true in the laws of physics where it states “for every action there is an equal and opposite reaction", so it is true of franchising, and to know if it (Franchising) is for you, you must understand these basic tradeoffs.
Franchising in a way is like a middle ground between being totally self employed and being an employee. You have many freedoms but as a franchisee, you have many, many rules to go by. The whole heart of franchising is STANDARDIZATION. And in fact, it’s what you are paying for.
One of the first things you have to ask yourself. . even before the money question is: “Is this for me?" and a key part of that is some self introspection: Can I willingly trust and take orders and direction? Do I HAVE to be the guiding and creative light in my business? If you can't answer this in the affirmative, then Franchising is probably NOT for you. To be a successful franchisee, you MUST be able and willing to follow the model of the franchise you will own.
Next, and particularly if you are starting up, and again before the money question you should ask, “Is this a product or service I can really feel somewhere from between enthusiastic to passionate about?". It’s not an absolute “must" to answer that in the affirmative, however study after study shows that a person working in a field they have a love or happiness for consistently is more successful that someone just doing a job because “its their job". There’s seldom enough money over time to make it worth while to do a job just for the pay.
Now we’ll assume you HAVE decided having a franchise is for you.
Your next biggest question is “Which one?" Sometimes there is only one choice for any number of reasons. . Finances to obtain one is an obvious reason. Possibly there is only one franchise in your chosen field. Or maybe the geographic availability may or may not coincide with what you want or need.
But let’s assume for the moment that you do have a choice, so your next questions have to do with income and income objectives. Are you in this for the long haul and you want long term career income? Do you see it as a short term investment that you'll do the startup only; get a client base, then sell. . supposedly at a handsome profit? If so, have you checked the fine print on terms and conditions of resale? Are you allowed to do that, or do you have to revert the franchise to the franchisor?
This is even important if you plan on the long haul. . what would your retirement or exit strategy be?
If a franchise can be sold. . are there any in place that are for sale? Cost compared to a startup?
Then on the short term plans. . have you talked to other franchise holders to see if they are happy? If the franchisor has kept their word as represented ? Would they do it all over again?
And finally. . how long until you actually turn a profit? Do you have enough funds to sustain you until that time?
This article is intended only as a Primer. There are many good and complete full books available on the subject such as “The Franchising Handbook". As we introduced you to some of the basic concepts, we now suggest if you still have an interest you get a full book on the subject and begin to read; followed by beginning personal interviews.
Good luck and Happy Franchising!
Joe Leech is a small business man with varied interests and accomplishments and he has written ebooks on the subjects of starting and running a manufacturers rep business as well as others. A full franchise reference site is available at http://franchiseop.ouronlinebusiness.com