5 Things You Need To Know Before You Consider Franchising
While more than 60% of Americans surveyed recently admitted that they want to be their own boss, not everyone wants to birth their own business out of the ether or come up with their own original idea for a venture. This is where franchising presents a unique opportunity for people that want to get out of the rat race and try their hand at ownership. In some regards, a lot of the hard work has been done for you when you purchase and set up a franchise. At the same time, especially if you’re just starting out, you probably don’t have all the information about franchising. HJR Global has compiled 5 of the most important things you need to know before you consider franchising.
Are You The Right Person For The Job?
Running a franchise is not always the “business-in-a-box” that many people pretend it is, which means that not everyone is cut out for the job. Creative types that have fun ideas or want to be free to make their own decisions are likely better off starting their own business from scratch. A lot of veterans or former military are more suited to the franchise model because they are used to operating efficiently within a certain rule set and regulated system. Before you consider franchising, make sure that you give yourself an evaluation. And remember: there is nothing wrong with realizing the opportunity isn’t right for you.
Do You Know All The Costs?
A lot of franchise firms or franchise consultants will try to frame owning a franchise in such a way that it seems “cheap” to start a franchise. Don’t let anyone tell you that. When you consider franchising, you should know that it can be cheaper, just as expensive or even more expensive than starting your own business from scratch. Everything just depends on a multitude of factors. What you should never do is buy into the ideal that a franchise business is a one time large expense and you suddenly have a successful business. You have a franchise fee, royalties and marketing, plus you may be required to pay into an advertising fund that handles all national marketing for the company. In addition, you have maintenance, payroll, taxes, upkeep. Plus, you have to have enough cash on hand to cover costs until you break even or you have to be okay with living on thin margins until you do. That’s not to say that you shouldn’t consider franchising as a cost-friendly opportunity. After all, many franchisors offer their owners ample resources to get on their feet because they make more profit that way.
Are You Prepared To Get The Business To Break Even?
Quitting your day job and becoming your own boss might sound like a dream come true until you get a reality check. Suddenly you’re trading difficult 40 or 50 hour work weeks for challenging 80 hour work weeks just to make it through to the break even point. You have to hire and maintain a crew or end up trying to do it all alone. And you might not have the skills you need to handle everything, nor will you be allowed to based on the franchise model rules. As you consider franchising, you’ll need to ask yourself if you’re prepared and have the time to do what it takes to succeed.
Do You Know Everything About The Franchisor?
If you are the type of person to take a company’s reputation into consideration before you become a customer, think about how much more that is for you as a partner of sorts. How a company handles themselves and their relationship is something you need to think about when you consider franchising. The best resource to figure out who you want to work with and who you do not is other franchisees. You can learn who is satisfied and who has complaints at sites like Unhappy Franchisees, which investigates and aggregates complaints and information about many major franchisors. Seek out franchisees in your area and discuss their experiences with certain companies. This will give you a baseline to figure out if it’s worth it to partner with a company and operate a franchise with a certain company.
What Are You Getting Out Of This?
Perhaps the most important question to ask when you consider franchising is what you will be getting out of it? That’s what should make it all worth it. If you’ve always wanted to own a Subway or Chipotle, then by all means, you should chase your dreams. The questions posed above are similar to what the HJR Global team asks people that want to fund their own idea for a business. These are the baseline questions you should think about before you even plan to open your doors.
If you’re ready to do just that, let the HJR Global team help you get that business off the ground. Our team can do anything from consult on your business plan to help you find funding and a location. Are you ready to start your business? Contact HJR Global today.