For many entrepreneurs, buying a franchise is a tried and tested way to acquire your own business. Though there is less risk than starting from scratch, it may not always be the best route for everyone. So before buying a franchise, every aspiring franchisee should ask themselves the following questions:
Do I love the brand I’m interested in?
As a business owner, you will be representing your chosen brand for many years. And your ability to do this will have a significant impact on your business success. So if your future is critically dependent upon this factor, how much can you commit to the brand?
If you have any serious reservations about the worth of your chosen product or service, this could be difficult to hide. It may restrict your profitability and development plans, and it may cause your franchisor to be wary of advancing your cause in the future.
Becoming a franchisee means becoming a part of the parent company and running your own business will take up a lot of your time. For these reasons you need to honestly convince yourself you can ‘live for the brand’.
Do the company values match my own personal values?
Many companies publish mission statements and promote certain corporate values. But before you purchase any franchise it’s important to get behind the company’s public face. Ask yourself if who the company is and who you are match.
Deciding on the right franchise for you will go beyond the simple day to day tasks. This is a long-term investment and so you need to be sure that your personal values are aligned with the franchise and the goals of the franchisor.
Considering another perspective: What does the franchisor seem to demand as regards a reasonable work/life balance? Speak to existing franchisees so that you can better understand what will be expected from you when you become part of the parent company umbrella.
There may be huge financial opportunities from certain franchises but make sure that you are willing to work the hours necessary to achieve these.
Do I understand what the franchise agreement will let me do?
Clearly, would-be franchisees thoroughly research an offer before proceeding. But just be sure you’re not so keen to own a business that you overlook some aspects of the franchise agreement you must sign up to. Yes, you will be your own boss. However, different sectors and different franchisors allow their franchisees varying levels of autonomy.
With that in mind, be sure you have had all your questions answered, and that anything you might have been promised during an earlier interview actually appears in your franchise agreement. For instance, it’s very important that you have voiced your own expectations about the future of your franchise business and truly understand the extent to which a franchisor will welcome your input and future development plans.
Furthermore, you should ensure that any agreement you plan to sign is carefully scrutinised by your accountant as well as your legal representative. More importantly, you should consider the implications of any restrictive terms imposed, and be sure that you will still be able to live with those conditions when your business is properly established.
Do I have enough money?
This question may seem simplistic, but any business investment has at least some level of risk attached. So are you clear about how much you could afford to lose if things went wrong? Even more to the point, do you actually know the absolute maximum investment the franchise will require? And how much of that total sum can, and will, be financed by lenders?
Then looking at your financial arrangements more directly, how much money will you need to live on? That, of course, leads on to how much you will be able to earn from the franchise – both now and in the future. And looking to that future, are you clear about how long it will be before you can expect to break even? Even though the answer to that question may vary from sector to sector, it’s still something you must establish before making a commitment.
Once you have a better idea about whether the franchise route to business ownership is right for you, the next stage is to begin looking for franchise opportunities
that will suit your needs.
By Jo Thornley, Head of Brand and Partnerships at Dynamis. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.