Are You Ready to Open a Franchise?
It’s really exciting to think about as you’re driving down the busy highway, passing all of those popular shops and restaurants, thinking to yourself “I can do that, I can totally run one of those!” And you may be right, with that entrepreneurial mindset you have, that drive and ambition, you may be ready to step out on your own and take the reigns. With a little help from an established brand name and concept, the cash to buy in, easy breezy right? Well let’s take a look at some of the preparations and expectations you’ll face as you venture into the franchising adventure!
Pairing your desire with a particular industry and choosing the right franchise is obviously a very important first step. Picking a franchise that pairs with not only your passion, but your skills is critically important too. If you’ve never worked in a restaurant, what makes you think you have what it takes to run one? After all, you’ll be the one running this business. You will be the one making the decisions and working the hardest. It’s very important to know what you’re doing as everyone will be looking to you for the answers and guidance, especially in the beginning.
Opening a franchise has many benefits. There’s the branding that’s already in place, the proven business model that has multiplied, the staff and support of an already structured corporate entity, part of a vast business network. You’ll have access to known vendors, product and inventory discounts and increased spending power. Even before you open you’ll have assistance in location selection, design and construction, staff training and business development. The moment you open your doors your product or service has already been established as successful, and its reputation is widespread, giving you the opportunity to start off with a proven method that has a standard of consistency and a pre-sold customer base. Now it’s up to you to withhold the standards.
As with any new venture, there will be hurdles. Undertaking something like this isn’t going to be easy breezy, so those blissful daydreams behind the wheel on your way to work, wake up! This is hard work. Yes, you’re stepping out and opening a business, yes you’re working for yourself in a sense, but you have to realize you’re still under a corporate umbrella. Those standards that were mentioned before, they have to be met. As a franchise owner you’re not completely independent, in many cases you’re even limited with that budding creativity you have as an entrepreneur. You have limits and expectations that are contractually implemented and procedures that are set forth in that paperwork. You enter a legal agreement as a franchisee with a franchisor. Mandates can range from the products and services and the styles and ways of how you offer them, to the pricing, hours and even geographic territory, those pieces all come with the playing board. So you must determine if you can handle and maintain an equal balance between the oversight, restrictions and governance and the ability to manage your own operation. Carefully consider the pros and cons of opening a franchise, and compare them to independently creating your own brand and solely autonomous business. Some people are more conformative and acquiescent, some are anomalous. Know thyself!
Once you’ve decided on taking the plunge into the deep end, this is where preparation comes into full effect. Financial preparedness is crucial. Having the capital to merely open isn’t going to cut the cake, you’re going to have to financially plan for some depth. In addition to franchise fees and opening costs, tally up the ongoing royalties and fees in addition to the expected overhead of actually running the business, make sure you have an absolute minimum of a full year’s worth stashed away in savings before you even cut the ribbon. Although opening a franchise is a good way of eliminating many of the risks of opening an independent business, it’s not a guarantee of financial lucrativeness. Profits can be slim to none in the beginning. This also means that you should plan ahead on the personal side as well. Your income will be tight in the early onset, and sometimes even nonexistent. Have your ducks in a row at home too, keeping in mind that you may not always have that glorious and consistent Friday paycheck.
So you’ve chosen the franchise of your dreams, you’ve selected a great location and you’re financially prepared to swing the doors wide open for business! That anticipated business is your market, and that market you better know well. As with most franchises, you’re going to have a territory. That can be an entire state, a county or even a few city blocks, it all depends on the franchise. Make sure you understand your market inside and out. Know your customers, your neighborhood and community, your local government and the overall demographics. This is very important as you become a noticeable fixture in your territory. In some cases you may not be the only franchise in your area. You may even share that area with a very similar business right across the street, so know your competitors too! With the marketing ability and the resources that you’ll have to reach out to your customer base, knowing your market will enable you to maximize that potential. It can also give you a good indication of whether or not you can maximize your investment to grow, sustain and exceed your expectations within a certain territory.
One clear advantage of buying into a franchise is buying into the business synergy that a successful franchise system harnesses, the unity that enables everyone involved to thrive together. From the days of Isaac Singer and his early sewing machine franchise model in the 1800s, the growth of franchising has exponentially grown to over one-third of the U.S. retail market. Over 10 million people make a living from the franchise model and well over half-a-million franchised businesses dot the American landscape. This could very well be your opportunity to make a mark in your desired industry. But evaluate carefully, even though this is a highly successful method of business ownership, it comes with pros and cons. If the shoes fit, run with them.