Today you can own a franchise in numerous industries: automotive, beauty, child services, education, hospitality, finance, fitness, food, pet care, travel, the list goes 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.
The upfront costs of opening a franchise are often high, which makes this type of investment generally a long-term commitment. It is important to have confidence in the longevity of the brand. Visualize your future. Will joining the franchise you are interested in help you realize the goals you have for yourself? Not only should you think if this career option is a fit for you now, but does it seem like it will fit into the lifestyle you see yourself living in ten years.
2. Don’t have blind faith.
Unlike other small business owners, when you are a franchisee you have limited control over brand image, marketing strategy, and other business decisions. This condition makes it critical that you agree with the vision, mission, and practices of the company you intend to join. It is important that you trust the decision makers of the business. Being passionate about the business idea is a necessary, but not sufficient reason to become a franchisee. Choosing a company that routinely makes decisions that you agree with can save you a lot of headache and frustration.
3. Assess the company culture.
If a company is its own entity, think of 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 the process of 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. Create a list of information you need regarding topics such as costs, risks, and benefits, and start 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 require capital.
5. Don’t let a question go unasked.
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 great, but speaking directly with current franchise owners is going to give you the opportunity 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 just take the time to reach out to them.
The information in this blog post has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, investing or accounting advice. You should consult with your accountant, lawyer or tax advisor before making any business decisions or moving forward.