Starting your own, independent, business is a lot of work that requires you to develop an idea. Create prototypes and come up with a whole new business model. The truth is that this is more of creative work than anything else. As such, might require a skill set that is more akin to that of an innovator and conceptualist than a manager or an entrepreneur. This is why some people choose to skip a huge part of the creative aspect of starting a new business and focus exclusively on money-making tasks. The simplest way to achieve this is to opt for a franchise business.
By buying and running a franchise, you get to make a name for yourself. You can create success in the business world without having to build your brand from scratch. If you can find a way to improve customer service and tap into your own target demographic in the best, most effective, way possible, you can easily make it even in the oversaturated market and industry. All of this is fairly easy to do if you understand the target market in question and in order to do this, you need to pick the right franchise business. With that in mind and without further ado, here’s how you can choose the franchise business that’s right for you.
What are the benefits of starting a franchise?
There are so many advantages of picking the franchise, to begin with. For instance, you get a lower risk of doing business, seeing as how you have a much larger company backing you up. A battle-tested business model, as well as already established infrastructure. You see, for the majority of franchises, the choice of the supplier is already established. The same as the menu/offer and similar areas of one’s business model. All that’s left for you to do is figure out how to handle the finesses like those. They are closely tied to the customer service, inventory management and workload organization.
Other than this, from the marketing standpoint, you’re not starting from scratch. The brand name, offer, logo and trends are already well-recognized within the field. Which means that you have a head start against all original businesses within the industry. Other than this you might inherit a part of the loyal customer base. In fact, the customers in question may have been so loyal that they were ready to travel a great distance in order to buy from a different franchise just because their own neighbourhood didn’t have one before you’ve opened. All in all, there are already so many factors working in your favour.
Naturally, it would be unfair and even outright ridiculous to assume that running a franchise is all sunshine and rainbows. There are more than a couple of downsides that you have to keep in mind, as well. For instance, the initial investment can be quite high, seeing as how the franchisor will always have certain standards for you to fulfil. With an original business, there’s no such restriction and you can easily start as a one-person startup if this is what you believe to be the best course of action.
Second, you need to keep in mind that you have to share your financial information with the corporate. Which is not something that everyone is comfortable with. One of the biggest concerns that a lot of people have here is the fact that your creativity may be seriously limited by the pre-existent corporate structure. Also, you need to keep in mind that a franchising contract isn’t permanent. Sure, chances are that for as long as you perform admirably and stick to your end of the bargain, the franchisor will have no reason to avoid renewing the contract. Nonetheless, the very fact that this is a possibility may be enough to make some people uncomfortable.
Follow your passion
One of the biggest problems in picking your franchise lies in the fact that too many people tend to ignore the subjective side of running a business. Everyone knows the difference in one hour of doing something they love and one hour of performing a task that they absolutely loathe, however, people still tend to measure their labour in work hours. Running a franchise is a challenging task, one that will take too much of your energy, time and mental endurance. It is, therefore, a lot easier to just pick something that you’re passionate about in order to make all of this so much simpler.
The problem, nonetheless, lies in the fact that your passion can’t be the only metric that you follow. Think about it, how long are you going to remain passionate about something that takes too much of your time, makes you sacrifice your private life and still loses you money. In order to make it, you need to find a balance between what you like and what is lucrative. Once you find something that fulfils both of these criteria, you’ll have the recipe for success.
Checking available options
One of the things that people often forget about is the fact that franchising is a territorial phenomenon. What this means is that a franchisor sells you a franchise for a certain area and that, in the future, there will be no other franchises in your own area. This alone helps you by eliminating at least one potential competitor from your area. However, it also limits you in a way, seeing as how you now have to look for an area without an already existent franchise. Moreover, there are some areas in which you might not be able to start a franchise, to begin with.
For instance, an Australian franchise might have a problem with you buying a franchise in Argentina, seeing as how it would make it incredibly difficult for them to provide support and oversee your activity. For this very reason, once you set your eyes on a certain franchise, you need to do some research on the right franchise business both for you and your target market.
The necessary support
One of the things that make franchise businesses even more attractive to future entrepreneurs is the fact that franchisors often provide necessary logistical support to the franchises. This can come in the form of staff training, workplace fit-out and other forms of professional assistance. Keep in mind that franchisors directly depend on the success level of individual franchises which means that they usually don’t find it hard to go the extra mile in order to provide this support. Still, it might be worth your while to inquire about the amount of support that you can expect from your franchisor.
For instance, the franchisor could help you with the location in order to ensure that it meets all of their standards. Second, they could provide you with construction assistance, in a scenario where the location or the supporting building needs to be constructed. Third, it helps you with your marketing. Due to the fact that they want the entirety of their organization to be aligned when it comes to their public image. Then, you have the above-mentioned training assistance, which may range from training people in operations of the business unit or some other aspects associated with the core business.
Check out the competition
Sure, the fact that you’re getting into the mix as a major player (at least a member of their team) is a great head start, however, you still need to do the research on the local market. A well-established local business might still be able to outcompete you and let’s not forget that you’re not the only franchise in the game. Every industry has a lot of major players who are competitors on both local and global levels. In this scenario, you need to check just how segmented the market is.
One more thing worth mentioning here is the fact that a lack of competition may be an alarming notion, as well. You see, a lack of competition may mean that there’s no need for the product/service that you’re offering in that area. As many as 42 percents of small businesses and startup fail because there’s no market need for the service that they’re providing and this is a pitfall that you want to avoid at all costs. All in all, properly surveying the situation in the field is the name of the game.
Check out their policies and company culture
The next things that you definitely have to take into consideration are their company policies and their corporate culture. As a franchise, you’ll be forced to abide by these rules and uphold the public image behind them. Therefore, you need to know what you stand for and what you’re up against. You see, if the franchisor itself is strong on certain issues or goals, it will be one of your obligations to act as their avatar in your own area. The problem with this may arise from the fact that you don’t share the same ideals. All in all, this is something best checked beforehand.
The best way to figure this one out is to do the research on franchise history. There are a lot of people who skip this part. Seeing as how they’re primarily interested in the financial aspect of the business. This shortsightedness is something that can easily lead you into a no-exit situation that could easily be avoided with just a couple of hours of online research and consultation with other franchise owners. All in all, you have so much work ahead of you.
Technology and innovation
One other thing you need to take into consideration is the use of technology by your franchisor and their insistence on the latest trends and innovation. Why? Well, because it will seriously affect your initial investment requirements, as well as affect your ability to keep track of everything that’s going on. If you have trouble with keeping a flexible business model and fear innovation, chances are that you’re looking for something with a tad more traditional system in place. On the other hand, the dynamics of such a workplace might be what got you interested.
The initial investment in the franchise
The next thing you should understand is the fact that you need to make an estimate of how much of a business you can actually afford. It’s not just about buying a franchise and getting started. It’s also about having enough money for your operational expenses, as well as a modest emergency fund. Even with a well-known and beloved franchise, it might take you a while to get the ball rolling. So, what you need to focus on is finding out if you can afford the venture or not.
What if things don’t go as planned?
Finally, you need to keep in mind that, more often than not, things don’t exactly go as planned. So, when this happens, what are you going to do? Provided that you’ve invested more than you could (realistically) afford, you’ll be in deeper than you want. This is why you always need to take a contingency plan. In other words, instead of being blinded by potential returns, you also need to consider all the risks and try to picture yourself in the worst-case scenario. Only this way will you be 100 per cent sure that you’re making the right move.
Conclusion on franchise
As you can see, the most important thing when it comes to choosing the franchise business that’s right for you lies in knowing yourself. What this means is that you know your habits, aptitudes and interests. This will allow you to pick the industry, the franchise and the model that suit you the best, thus creating a scenario in which you’re creating success without even trying too hard. Still, this would require you to know yourself, your competition and your market, which is all but simple. Nonetheless, the reward is more than worth the effort invested.