A Franchise Opportunity, Real Franchise Information Helps You Choose
Has a franchise opportunity that has caught your eye. Is a franchise for sale getting you to consider becoming a franchise business owner, a franchisee? Or are you looking for some way to get into business for yourself as a means to a better income and lifestyle?
I applaud you for looking into a business for yourself, this is the only way to get ahead of the devaluation of the job market. You know what I mean, with companies hurting, wages and benefits are going to suffer for some time. Yes, the only way for you to get ahead of the income curve is to become self employed.
The question is, do you know what you are getting into? Before you invest a large sum of money and commit the next few years of your life to a franchise business, make sure you are fully aware of what you are getting into. Doing some due diligence will help ensure you are making the decision that is right for you , that the business will support and align with the lifestyle you want.
First, I do understand that the survival rate of a franchise business is much better than going onto a business all on your own. On your own the success rate is about 3 to 5 percent after 3 years depending on who you listen to. And with a franchise it gets much better, about a 96% success rate after 3 years, which is most likely why you are looking into a franchise.
With a franchise you are essentially paying to get a couple of things. You are usually paying for a proven system, and a known brand name. Now the question to answer here is, how good is the system and even more important, how good is their training and support? The larger long standing companies will generally be better at those factors, but you will certainly be paying for it with the initial buy in cost and ongoing franchise fees. The better the system, the more you pay. This is just like anything, you get what you pay for, although there is not guarantee of this.
It is very important to fully research each franchise opportunity you are looking into, don’t just rely on the companies provided information. To get a clear picture of the operation, you should get input from both sides of the equation. It would be valuable to contact people actually operating the same brand of business you are interested in to find out how the franchise company actually interacts with it’s operators and provides services. You might find also that they know other same brand operators as well as know about both the success and troubles others have had.
The common statistics on success ratios are challenged by some who indicate gaps in the reporting requirements of how franchise companies have to provide the information. You have to remember, the franchisers want the statistics to look good. Consider making sure that you address all of the following topics so that you are making an educated decision, not just an emotional one. Obtaining all franchise information needed to be well informed is your responsibility.
The most common reasons for franchise failure are:
Where they do not have a very good duplicative system either because they are new to franchising and have not yet perfected it, or because they just don’t care to create a really effective system to better ensure your success. Some are primarily focused on the initial profit and not so much on developing and maintaining a system to help you continue in success, if you fail they can sell it again to someone else.
The other way franchisers can be ineffective is with their ongoing support, or the lack of it. As a franchisee it is imperative that you receive very good training and ongoing support. This is a large part of why a franchise makes sense to invest in. Without adequate training and support the amount you should pay diminishes rapidly. If you are going to have to figure it all out on your own, why would you need the franchiser? You may not be able to survive long enough if you need to figure everything out on your own.
The first three most important factors to the success of a physical location business are, location, location and location. It’s quite simple, a good location = good traffic, a poor location = lousy traffic. The big question here is who is picking the location and how good are at this? Many franchise businesses fail because, in spite of a known brand name, the people do not come. Location can have a big affect on your start up costs, as a good location is usually more expensive. The property owners usually know the relative value of their location and will charge accordingly.
It can be very dangerous to your long term success to go cheap on picking a location. Traffic, visibility and ease of access are some of the critical aspects to consider. And of course demographics, are there enough of your potential customers close enough to your location. The location analysis does vary a little depending on the exact business you are looking to open.
This is where a franchise company authorizes too many locations in close proximity. In my home town, they recently closed 3 Starbucks coffee locations. There were way too many in the area, so none of then were able to operate at a good profit range. And a major chain of ‘sit down’ restaurant closed in a reasonably good location. but apparently too close to the next one. It takes a lot of sophisticated research to determine unit location, it’s even difficult for the large companies.
Here is one many people miss by a mile when figuring their operating expenses, especially at start up. Newspaper ads, fliers and discounts will likely be needed in mass in the beginning. And the need increases greatly if the location is less than ideal because of competition, demographics or same brand competition. Any business, no matter what kind, or form requires a constant flow of traffic and some forms of advertising are usually a constant no matter how long you are established.
This an area that can be fed from both ends, the perspective owner as well as the franchiser. You, as the owner, want the business to be a success so it is very easy to over expect what it is capable of. And, the franchise seller certainly wants to paint a very glowing picture of the possibilities. What this boils down to is money, yours. You may not bring in as much as you had hoped for, thus your fixed costs are a much larger percent of the equation.
When you are looking to invest as much as you are in a franchise it is very important to do the research as deep as possible, leave no rock unturned. The seller of the franchise opportunity will make it sound very lucrative and even easy to operate, don’t be totally accepting of everything they tell you, take it with a grain of salt, do your own research to verify all points.
Perhaps contact owners of existing franchises like you are considering, find out from them how their experience has been. How good is the system provided and how well does the franchiser support it? Respect the opinions of people who are already doing it, how is their business, how many hours do they put in? What, if any problems or glitches have they had, and maybe, how they can be avoided by you? These owners may know of other operators and how their businesses are doing as well. This may seem like a lot of effort, but just think of it as an investment in your future.
What if you didn’t find out about a crucial point that drastically affected your business, until after you were in a big mess? Miss judging the time commitment, customer traffic, true costs, product or service desirability, location and many other factors can quickly take a good idea into a disaster you are stuck will because of your investment.
The other aspect that should be carefully considered when choosing a business is your time. What are you going to be doing with your time? Will the business require long hours? Will it allow flexibility, the flexibility you want?
In thinking about your time, the bottom line is your lifestyle. Does the business model you are looking into fit in with and actually support the lifestyle you want? After all, why are you looking to get inopt a business of your own? Is it just for the money or do you have specific desires that the money earned and the flexibility will help you attain?
One must be careful when looking at a business to get into that it really supports your desired life, otherwise you may be just buying your way into a new income stream with little improvement to your overall life, and the activities you really want to be applying your time to. Many people jump into a business envisioning it as a vehicle to a better lifestyle, and they end up with the same of even more of what they wanted away from in their job.
Many businesses can take up a lot more time than you think up front. A business can also bring on more opportunities for increased stress, with overhead expenses, employees, inventory and dealing with unhappy customers. Many times a business owner will end up with less time for home and family rather than more. Careful analysis of what you want for your life is in order before you can make a proper decision if a particular franchise is a good fit. Isn’t the idea of going onto business for yourself a way to improve your life? Then make sure that your choice can in actuality accomplish this, and not end up the other way around.
Happy hunting, there is a good business out there for you, that can serve the life you want.
About the Author
How to get into business and have a personal life at the same time? For a viable alternative to a franchise business that is easier to get started, requires less time to operate and actually helps enhance your lifestyle.
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