Is Franchising Right For Me?
Modern franchising has been an integral part of the American economy for more than 70 years. There has always been something uniquely American about entrepreneurs coming together, under the same trademark, to reach heights that are unachievable on their own. There is some debate surrounding the exact numbers, but franchises succeed at a much higher rate than independently owned businesses. The idea of investing in a business that already has an established blueprint and proven track record has helped countless Americans find personal happiness and professional fulfillment through franchising. It can be an amazingly prosperous business arrangement, but reality is that franchising is not for everyone. Frankly, it may not be for most people. If you’re uncertain if franchising is right for you, the following questions will help provide some clarity:
Why do I want to be a franchise owner?
This is the most fundamental question you should ask yourself during your due diligence process. People often turn to franchising as a way to alleviate some sort of immediate pain such as an escape from corporate America or a cure for retirement boredom. These can be legitimate reasons to franchise, but be careful that you aren’t confusing the urge for immediate gratification with a long-term, sustainable, interest in business ownership.
Before you spend too much time exploring franchising, I encourage you to write down and self-critique all the reasons why you’d consider it. Are they quick-fixes or sustainable reasons? For example, if “escape my corporate job” is one of your reasons, ask yourself if franchise ownership will provide long-term relief from the challenges/frustrations you’re trying to escape.
To get your creative juices flowing, here are a few other reasons why people choose franchise ownership: flexible lifestyle, security and stability, build wealth, build equity, build a family business, control, chase a passion, join an industry you otherwise couldn’t, self-validation, status.
Are any of these reasons on your list?
Can I afford it?
More businesses fail from being under capitalized than any other reason. When considering how much you can afford to invest in a franchise, it’s always a good idea to overestimate your total startup cost. Don’t forget to include the operating capital you’ll need to keep your business afloat in the time it takes to become profitable. Your path to profitability can take as little as 3 months or as long as 2 years.
Depending on the franchise, total startup cost ranges from $50,000 to +$2,000,000. In most cases, 20%-30% of your total startup cost will need to be liquid capital. The rest can be financed. There are a wide array of funding options available to aspiring franchisees. Lenders love to finance franchises because of their proven track record and high rate of success.
Do I have the time to own a franchise?
Semi-absentee and passive franchise opportunities do exist, but you’ll pay a premium for the increased flexibility in lifestyle. As a more conventional owner-operator franchisee, you should expect to work long hours, especially in the beginning. Do you have the time to grow a business? Are you willing to put in the effort? Also consider any lifestyle changes it may require.
Will I enjoy it?
People sometimes buy franchises with the sole intention of making a lot of money, only to later realize that they’re miserable in the business. The Golden Rule of franchise exploration is the start from the inside-out. This means that rather than jump right into exploring franchise brands, you should first focus on exploring yourself. What are your professional strengths and motivational drivers? What are your business goals? What is your desired lifestyle? What is your behavioral profile? By first looking inward, you’ll be surprised how easily the right franchise brands come into focus. The inside-out approach will maximize your chances of choosing a business that can make you happy for the next 10-15 years.
“Find a job you enjoy doing and you will never have to work a day in your life” -Mark Twain
Does my family support my vision for business ownership?
You’ll need your family in your corner for franchise ownership to work. Regardless of who’s directly involved in the business, everyone in your family will be affected by your decision to become a franchise owner. Make sure they understand the strain it will put on your time. You may want to consider your spouse as a possible business partner. Husband and wife teams are very common in franchising.
Do I need full control?
Franchising appeals to a lot of people because somebody else has already spent the time, effort and money to prove out the business model. In order to succeed as a franchisee, it is absolutely pivotal that you stick to the plan outlined by the franchisor. It’s a tremendous advantage to be handed the playbook, but it also limits your level of autonomy. Some entrepreneurs relish the thought of embracing a pre-defined blueprint, whereas others will struggle to execute someone else’s plan. In order to determine which side of the fence you’re on, look back on your career and ask yourself if you’ve ever struggled to stay engaged while following someone else’s lead. Do you have trouble relinquishing control? If you want ultimate decision making power in all areas, an independently owned business may suit you better than a franchise. Are you willing to sacrifice some control in exchange for the many advantages a franchise model provides?
Am I a self-starter?
The ability to self-motivate is another characteristic shared by successful franchisees. Owning a business requires a great deal of discipline, hard work, and patience. Do these attributes come naturally to you or do you perform better when somebody else is pushing you? As a business owner, you control your own destiny. Does that type of responsibility excite or scare you?
Do I work well with others?
Franchising is the business world’s purest form of mutualism. In a franchise system, the franchisee and the franchisor are equally reliant on each other to succeed. It’s a relationship based on trust and a shared goal.
As a franchisee, the importance of strong interpersonal skills can’t be overstated. In addition to maintaining a solid working relationship with the franchisor, you must also interact well with other franchisees, vendors, employees and customers. Do you have the self-awareness, self-control, empathy and social aptitude to work well with all these groups of people? If these skills aren’t currently a strength of yours, you must be willing to devote ample time developing them.
How did you fare!!?? If you answered “yes” to the majority of these questions, then your next career move may be right under your nose!