Buy a Franchise and Become a Successful Business Owner
A franchise is a kind of a business where you buy a license from the owner (franchisor). This license includes trademarks, proprietary knowledge, and processes of that business (franchise) which allows the buyer (franchisee) to work under the already familiar business name. Isn’t it convenient? It is said that anyone has greater chances for success when works are under an already developed brand. Peter Birkeland, the author of the book Franchising Dreams: The Lure of Entrepreneurship in America says when explaining the good sides of this business opportunities: “You can be your own boss, you’re operating under a trademark that has instant brand recognition, and the failure rate for franchises is lower than it is for mom and pop businesses.” But beware, there are some questions you should ask (yourself and the franchisor) before buying a franchise. Let’s see what are those questions.
Can You Handle It?
These businesses have relatively simple organizations and that is for a reason – if something is complex and cannot be copied easily, then it probably cannot be franchised. And now the crucial thing here – are you someone who has a degree from a university and may become bored running a franchised business? That can be a big problem if you come to this phase.
What Are Your Life Priorities?
Every business requires full devotion from its owner. Retail and restaurant businesses are especially demanding – no free weekends nor holidays. If you are hoping for some free hours/days to pursue your loving hobby or to spend more time with your family and friends, then think again about owning this kind of business. Are you really prepared to devote yourself fully to it? If not, maybe you should reconsider this decision of buying a franchise.
Are You Into Public Relations?
Owning a franchise requires dealing with the public – unless you hire someone else to work for you as a public relations officer. It would be your duty to deal with the press and all the dissatisfied customers. Are you ready for it? They can sometimes be really rude and cruel even with no real reason whatsoever.
Do You Know What Happens If You Want To Quit?
Almost every franchise has a clause in the contract saying you are obliged to handle it for 10-years-time. If you want to quit it before that time, there is only one-way out – you have to sell your franchise unit to someone else. Some franchisors can sometimes help you find your buyer, but others just don’t care about it since it is your duty to find a new franchisee for your unit.
Do You Like Being Stuck In One Place?
Every franchise unit is restricted to one place/territory only. You cannot open units or even advertise outside that place/territory. Which place will that be? How can you decide? How would you feel being bound to one place?
Carefully Check For All The Hidden Costs!
You will probably get a chart from your franchisor showing the costs, but you should ask if those are all the costs. It can happen that you get only some of them and many could stay hidden. You can be quite shocked later when your agreement is already signed and you cannot get out of it. You should ask questions about the following items: rent, legal and accounting fees, the cost of debt service ( if it is the case that you are borrowing money to buy the franchise), travel, lodging and meal expenses in cases of attending the training programs, insurances, employee benefits, and payments.
Have You Chosen The Right Franchise For A Specific Territory?
Just because some franchise functions well in one place, it doesn’t have to be successful in the other, even a similar place. You have to know the inhabitant’s routines and preferences to be sure that they will use your franchise for their needs.
Think about the possible franchise’s expansion
You have to analyze all the possible competitors for the franchise in the area. If you want to expand your business to other territories, it can happen that your own franchise is your competitor there. You really don’t want to spend a lot of money to open a franchise and to find out that your biggest competitor is the franchise itself. Ask your franchisor about the franchise’s future plans! This can save you a big money later on.
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