Estimated reading time: 3 minutes
Today you can own a franchise in numerous industries: automotive, beauty, child services, education, hospitality, finance, fitness, food, pet care, travel, and so on. You name the industry, and a franchising opportunity probably exists. An increase in franchise categories has inspired many people to buy franchises. This Balboa Capital blog post has five tips for prospective franchise owners.
1. Know what you want.
Opening a franchise is often expensive, making this type of investment generally a long-term commitment. It is essential to have confidence in the longevity of the brand. Visualize your future. Will joining the franchise you are interested in help you realize your goals for yourself? Will this be a good career option for you now? And, will it fit into the lifestyle you see yourself living in the future, say in five or ten years? Many franchise owners know what they want before venturing into the franchise industry.
2. Don’t have blind faith.
Unlike other small business owners, franchise owners have limited control over the brand image, marketing strategy, and other business decisions. This makes it critical that you agree with the vision, mission, and values of the company you intend to join. In addition, you must trust the decision-makers of the business. Being passionate about the business idea is a necessary but insufficient reason to become a franchisee. Choosing a company that routinely makes decisions you agree with can save you a lot of headaches and frustration.
3. Assess the company culture.
If a company is its entity, consider its culture as its personality. As you know, every company has one. One question you should ask as a potential franchisee is, “what does the culture look like within this company, and what implications could that have on the future of the business?” In generating an impressive bottom line, a company could develop a negative culture that could ultimately harm the business and make it a bad long-term investment.
4. Do your due diligence.
Learn the ins and outs of the business so that you can make an informed decision and minimize your risk. Diving into research can be a daunting task, so start small. First, create a list of information you need regarding costs, risks, and benefits, and start from there. You will develop more questions as you go. For example, you might ask about brand mandates, remodeling needs, and property improvement programs, all of which can be capital-intensive.
5. Talk to franchise owners.
Go a step above researching the franchise online. Many franchises have a Franchise Disclosure Agreement (FDD) available online. In the FDD you can find a list of current franchise owners and reach out to them with the questions you couldn’t find the answers to during your research. Research is excellent, but speaking directly with current franchise owners will allow you to ask unique questions and receive answers from a direct source. It may surprise you how many people are willing to speak with you if you take the time to reach out to them.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.