09 Aug What You Must Look for Before Buying Any Franchise
Buying a franchise is a smart move if you want to become an entrepreneur without the hassle of creating a business from scratch. Franchise chains – unlike brand-new businesses -have shown that they are well-received by the public. Meaning it clearly has been profitable.
Buying a franchise is to skip through the
growing pains, trials-and-errors, and
For these reasons alone, it becomes tempting to opt for purchasing a franchise, but they may also add up to a hefty price tag. High procedural fees, big sales percentage cuts, and excessively marked up supplies can quickly lead you into feeling trapped in the business. Too much spent to leave, to little earned to stay. On top of that, many franchisees are duped into signing the contract based on unscrupulously misleading sales projections and poor training
What are the aspects that we can and should look for then?
To start, there are obvious considerations.
It has to be something that fits within the budget you are willing to invest, something in an industry that interests you, something that clearly has no legal obstacles (such as technological surveillance and counterfeiting existing products).
From our own encounters and our clients’ stories, here’s a list that you can print and check to avoid mistakes that others have painfully gone through. Undoubtedly, there are a thousand things to thinking about, but if you just focus on these, you would’ve covered all the bases.
6 things to consider before buying a franchise:
1. What do I enjoy?
If we put aside the money, what do you truly care about?
A franchise is not a three-month summer camp. It is your long-term career, your main time investment, and an extension of your values and personality. Is the business something that will make you happy to walk into the office every day, something that makes you feel proud, something that will keep you motivated to get creative and keep growing?
The money always comes only after; at the end of the week, the month, the year. But the act of running the business is present, happening in the moment, so you better find something that you enjoy doing.
2. How does the company run?
Do some research on employee reviews on sites like Glassdoor and Indeed. Check their extraprofessional activities on their LinkedIn pages, especially the ones posted by their staff and not the company. If the company has customer-facing outlets, talk to the employees and ask how they feel about working there. Are they treated well? Is there excessive hatred towards “the main office”?
Most companies have websites detailing their brand story and mission, as well as their corporate social responsibilities. Although these are likely to be carefully curated by the PR and legal team, it should give you an idea of their core values and non-financial visions.
3. Do they have standards?
Great brands are selective about whom they sell to. As much as you want yourself to make the cut, you should also wish for them to be stringent. You don’t want other careless franchisees that will tarnish the brand image to be part of the company that you want a piece of.
Not only that, you might also consider selling your franchise sometime down the road. The less the main company sells franchises, the more exclusive your franchise will be. With that, you really want a company that prioritises reputation, as their reputation is directly also your
4. Have they been successful before?
The main benefit of buying a franchise is the selling power of a known brand. That’s the whole point of paying the money. To buy something that’s proven to work.
If they have only one or two existing franchises- or even none – they have not proven their company’s public relevance and long-term profitability. You need to see real sales figures through the past years from currently operating locations, not rely solely on fictitious projections about what may happen.
Your money and time are not someone else’s experiment project, so unless you are an experienced franchisee, avoid newer companies with little history of working well.
5. Is there someone to answer my questions?
Franchisors will most likely give you some existing franchisees they know are satisfied to call. So, you have to anticipate that they are most likely to give positive feedback, but what we really want is information that can help us to gauge the opportunities for you, not their individual feelings.
With that in mind, ask questions that shed light on the inner-workings of the brand. What does the company do to support your ongoing success? How much did you actually spend and what are expenses you didn’t expect? How long did it take to start profiting? Did the business and the franchisor meet your expectations?
Better still, make friends with existing franchise owners and ask about their experiences dealing with the owners. Don’t rely too much on any one source. You will be surprised how willing people are to share their perspectives. From there, sieve out the opinions and lay out the facts.
6. Market resilience
Some business concepts are trendier and more vulnerable to changes, while those comprising more “essential services” can stand the test of time.
Compare nitrogen ice cream shops versus a basic ice cream parlour that has been loved for generations. Conceptual hidden bars versus a classic jazz lounge. Trendy fast fashion shops versus departmental stores.
Not one is better than the other, but you can now begin to see the factors tied to your business field that must be considered. Is it bound to specific short-term public interest that you can’t control? How much of your sales is directly tied to the economy as a whole?
No business is bulletproof, but hopefully, you can find one that can be profitable in most situations. Think about the potential obstacles throughout the duration of the agreement and your own expected involvement in this business.
Franchising is such a unique experience, you get to feel
like a part of a large corporation, yet be an independent
business owner yourself.
At the end of the day, it’s your personal interests, financial goals, and familiarity with your local supply and demand that will really take you there.