Most of us dream about one day owning our own successful business, making a lot of money, and retiring to the sun. The trouble is, entrepreneurship is a scary proposition, and launching out on your own is difficult, stressful, and, unfortunately, more likely to fail than succeed.
This is exactly where the franchise business steps in. For a fee, which varies according to the opportunity, anyone can buy into a business with a proven brand, tested marketing strategy, and loyal customer base. From fast food chains to florists, and many other businesses besides, there’s a franchise to suit almost any taste. The trouble is, with so many opportunities out there, how do you choose the right one for you?
Here are the top four key points we think you should consider before you buy into any franchise.
1. Cost
Yes, I know. Obvious. But still the number one factor in choosing a franchise! Since the costs of franchises can run from a few hundred, to millions, the very first thing you should do is identify which opportunities you can afford. There’s no use setting your heart on a franchise that you can’t afford, is there? Of course, finance is available for franchises, but you will still have to have some collateral of your own in most cases. So figure out what your price range is before you start whittling the list down!
2. Reputation
Now that you’ve figured out what you can afford, take a look at the companies you’re considering. Ideally, you’d like to look for a business that has a proven track record, over a number of years, and a loyal client base. You are, after all, buying into a brand! Make sure that the brand you are choosing is going to give you the return on investment you want.
Of course, there may be deals on new franchises that you cannot pass off, but remember, newer franchises will still be ironing out teething problems, and developing their market. If you are in for the long haul, and prepared to put in the work, it might work for you.
3. Legality
Franchise businesses are governed by very specific laws, in every country around the world. Make sure that the franchise you are buying into has all their ducks in a row as far as the legality issues go, and if you are even a little bit concerned about the contract, have a lawyer go over it with a fine toothed comb.
4. Royalties
The royalties you pay on your turnover will vary greatly from franchise opportunity to franchise opportunity. Make sure that they are not so high that they will cripple your business. Remember, you will need to cover costs, pay your royalties, and make a living!
Speak to existing franchise owners, find out what their earnings are like, and do some research, before you jump in. Remember – earnings are not the same as profits!
If you follow these basic steps, to whittle down a long list of franchise possibilities, you should find that you’re left with a few stellar choices. Now, all that’s left is to take your pick!