At first glance, buying a franchise may seem like a fool-proof path to business success. But although franchises already have proven sales records and an established brand, there are still a lot of variables to consider. More than that, buying and owning a franchise is not the right choice for every type of entrepreneur.
With all that in mind, how do you know if buying a particular franchise is right for you? Here are several questions to ask yourself (or the franchisor) before making the investment:
1. Can I realistically afford to franchise?
In some ways, buying a franchise may be cheaper than building a business from scratch. From business registration to hiring employees, the costs may be relatively lower with a franchise compared to a new business. Still, it is important to ask yourself this question: can I afford a franchise? And realistically, at that?
For example, you are interested in a printing franchise. The franchisor gave you a list of printing franchise costs. Keep in mind that the list from the franchisor may not include your expenses on rent, taxes, insurance, and other business costs. With the capital that you have now, you are confident that you can afford to put up the franchise. But have you considered the operating costs of the first few months as well? If you have and you are still confident, then it’s a good sign that you should continue with the purchase.
2. Are you passionate about the product or service that they are offering?
You should be able to connect with the business’s products and/or services at a level higher than vague interest. Otherwise, what is the point of buying a franchise that you are not passionate about?
For instance, if you are eyeing a health food franchise but aren’t interested in the products they are offering, much less about eating healthy—then how can you connect with your customers or contribute to innovation? Simply put, it’s not a good business practice. Always remember that business is more than just numbers and results—it requires a personal connection that can motivate you to remain involved, even if it’s not your original business idea.
3. Does the company provide good customer service to franchisees?
A lot of franchisees often overlook this factor when shopping around for potential franchisors, but it is extremely important for your experience as a franchisee, and ultimately, the success of your business.
Most franchisors will put the best foot forward when they see you as a potential franchisee, but not all of them will continue to provide great customer service after you sign the contract. That said, ensure that the franchisor you want to enter a deal with is consistent with their service. You can do this by consulting with existing franchisors, asking them about their experiences with the franchisor. If they tell you that the franchisor is slow to answer queries, does not provide adequate support, and seems to be in it for the money alone, then move forward to the next option.
4. Are you ready to commit?
One of the many benefits of buying a franchise is that the business is practically ready for operations. You don’t need to go through the rigorous process of creating a business plan, formulating policies, or researching the market—the franchisor has already done it for you, and the price of that is included in what you pay for for the franchise.
However, this doesn’t mean that you can sit back and let the business run itself. Yes, the franchisor will provide guidance, but you also need to commit a lot of time, energy, and money to run the business as you would if you built a business from scratch. If you are ready to commit, it’s a good sign that you would make a great franchisee.
5. Do you have a great location in mind?
If you are starting to look for potential franchise businesses, you should already have a good location in mind. Furthermore, you should have already done your research about that location, particularly on the local competition, the rental prices, the local business laws, zoning, and other relevant factors. This way, the franchisor will be better able to help you establish your business in the area that you are targeting. And if the location is not as great as it seems, the franchisor can help you find a better one in your target locale.
Buying a franchise requires quite a hefty investment most of the time. And the best way to maximize that investment is by ensuring your readiness for a franchise—as well as the quality of the franchise business you want to buy.