If you’re thinking about what type of business to start, buying a franchise might be worth consideration. Franchises are great for many entrepreneurs: everything is laid out for you, which makes your work a lot easier. But on the other hand, many business owners find that franchises stifle their ability to make creative decisions. Ask yourself these questions to see if becoming a franchisee is right for you:
1. Do I Want an Out-of-the-Box Solution?
That’s what a franchise is, essentially. You’re handed a book full of guidelines for your business, and presented with marketing materials that are identical to what all the other franchises of this company use. If you like the idea of this simplicity, dig further into franchising.
2. Do I Seek a Proven Solution?
When you start a business from scratch, there’s no guarantee that your business will thrive. When you buy a franchise, you can look to dozens or hundreds of other locations to see how popular they are, as well as get a sense for how much you can make as a franchise owner. Knowing what to expect with your franchise can cut down on some of the risk you take on as a business owner.
3. Do I Like Playing By the Rules?
Because there are a lot of rules with a franchise! You can’t, for example, add a new product to the menu at your burger joint, or change the logo. If you’re okay adhering to what the franchisor has set as the rules, keep considering the franchise. If you prefer to play by your own rules, you’re probably better off starting your own business.
4. Do I Have the Capital for a Franchise?
Typically, buying a franchise is a fixed fee, and an ongoing royalty fee. You can find out what it is by inquiring with the company you’re considering. This will likely cost you far more than starting your own business from scratch. But one advantage is that at least with a franchise, you know what to budget for startup costs.
5. Do I Know What Kind of Franchise I’m Interested In?
There are food franchises, health franchises, grooming, boutiques; you name it. There are even business coaching franchises. So if you’re not already clear on which category you want to buy a franchise in, spend some time researching your options. Ideally, it should be in an industry you have experience in.
6. Am I Appealing to Franchisors?
While money certainly talks when it comes to buying a franchise, many franchisors won’t even talk to you if you don’t hit their net worth requirements. Many premiere food franchises require interested candidates to have a minimum of two million net worth and the ability to purchase three franchises not just one. They’re not just trying to sell you a franchise; they want to be sure you have enough money in the bank to help it succeed. Make sure your financial health is top-notch so that you’ll be a competitive candidate for buying a franchise.
Republished by permission. Original here.
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