When you have the dream of starting a business, one of the most viable options is to purchase a franchise. You receive a tried-and-tested brand for your investment, and you also have support and expertise available from the franchisee.
The various advantages of running a franchise are why this business type continues to grow in popularity. Plus there are many different franchise categories and options to choose from, ensuring there is something for every would-be entrepreneur to get their teeth stuck into.
With that said, you mustn’t go into the franchise business with the thought it is a guaranteed success. There are plenty of challenges to face, and getting unstuck on just one of these can see your dreams crumble.
To enhance the chances of succeeding, there are specific steps you can take. Here are three essential points to remember when buying your first franchise.
Understanding the costs
For anyone that is planning to start their own franchise business, there is one thing they will look at before any other: the cost.
The reason for this is a simple one. There is a significant variance between what individual franchises cost to purchase. With some of the bigger franchises available, you’re looking at spending six figures before you can start utilizing their brand. Statistics highlight the initial franchise investment, including real estate, is $250,000. For others, however, you might only need to spend a few hundred bucks – Marge Simpson bought a pretzel franchise for just $500!
If the investment for your franchise of choice is a particularly large one, there are financing options available if you don’t have the money sitting in the bank. For instance, you can utilize franchise funding to get your plans off the ground.
Yet that initial purchase cost is only the start. There are also operational investments – such as equipment and initial inventory – you have to factor in before you can get going. Oh and then there’s also ongoing costs like rent, utilities, franchisor royalties, and so on.
The importance of research
Regardless of the nature of the business that you’re starting, research should be a crucial part of the process.
This research can include everything from analyzing local competitors to delving deeper into the background of your franchisor of choice. Regarding the latter, remember: there’s a vested interest for franchisors to attract franchisees. They will typically fluff up the value of their opportunity. You mustn’t simply believe what they’re saying, and to look into their figures and any available documentation.
Know what support is provided
Having a support channel is another essential component for any business. Whether it’s a mentor to lean on for advice or a family member for emotional support, this help – or lack of it – can make or break your business.
Thankfully, one of the significant advantages of going the franchise route is realizing you’re never alone. The franchisor will be there to provide assistance. However, you need to know the level of assistance they will supply. Will you be left to your own devices? Will they be hands-on? To know how much help is on offer, look into the experiences past franchisees had with the company.