Considering a new career in the franchise world? Here are some questions you should answer to understand if the franchise business model is right for you.
Are you new to business?
If you don’t have any formal experience of running your own company, franchising may be one of the best business opportunities available to you. That’s because you’ll be working under a brand that already has significant market exposure and operates with a proven business model.
This minimises your risk and increases your prospects of achieving a profitable and sustainable business.
If you were to start an independent business from scratch, you’d have to go through all the trials and tribulations of turning the concept into a business model and achieving brand recognition.
This can be very costly and time-consuming, especially if you’re new to enterprise.
Do you want to be part of a robust business network?
Being a franchisee doesn’t just give you the opportunity to run and operate your own company under a franchise business model.
You’ll also have the chance to network with fellow franchisees, gain insights into how they’ve built their companies under the same brand, and be part of a large, supportive community.
In fact, franchisors often arrange networking events free of charge and encourage maximum participation. After all, it’s in their interests to get franchisees to exchange ideas and find new ways to drive the network forward, especially when more people are buying into a franchise with the same brand.
This means you’ll have plenty of opportunities to stay up-to-date with your industry and learn about the latest trends and ideas.
Plus, gaining new business contacts and sharing your ideas can help you stay motivated and focused, especially when your franchise is still in its early stages. On the other hand, a solo entrepreneur might not have the opportunity to attend these types of events and learn from other business leaders face to face.
Is there a specific industry you’d like to work in?
The chances are you’ll enjoy a much higher sense of job satisfaction if you run a franchise in an industry that you’re passionate about and/or have experience in.
For example, someone with experience of managing a restaurant or who has a passion for food is more likely to enjoy running a catering or restaurant franchise, whereas a former athlete or exercise enthusiast may find success running a gym franchise.
Is the franchise model you’re considering going to survive?
Make sure you research the franchise industry so you can determine whether the underlying business model is sustainable.
For instance, some franchise models can become obsolete when a competitor comes up with something much cheaper and more efficient. Consider the viability of a video rental franchise in the early 1990’s, before the invention of the DVD player in the early 2000’s. And things continue to change. Investing in a DVD franchise now would be a dangerous move, as sales have fallen drastically thanks to the boom in digital downloads.
Are you looking for ongoing training opportunities?
To remain competitive and offer the best business opportunities, franchisors must continually invest in research and development. This enables them to innovate their product offering and keep their customers happy.
As you can imagine, it’s in their interests to provide you with ongoing training and support so you can maintain a high level of operational efficiency and sustain your franchise model.
Are you happy to operate under someone else’s concept?
A franchisee has to be comfortable carrying forward a predetermined concept and representing a brand that was created by someone else.
Your franchisor will have clear guidelines for how you market the brand and communicate with your customers/clients, as this will ensure all franchisees are consistent.
For quality control, you’ll also need to work with a list of suppliers that have been approved by the franchisor, even if you wouldn’t necessarily choose these suppliers yourself.
Do you have enough money to finance your franchise business?
Before buying into a franchise, make sure you meet the franchisor’s financial requirements and have enough working capital to fund your franchise’s day-to-day operations.
While franchisors will tell you what the minimum requirements are for the investment, you’ll still need extra money for getting the business up and running, and to pay for legal fees and any moving costs.
Many franchisees finance the majority of their investment with their own money. However, large franchisors will often have good relationships with UK banks, which may be willing to offer more favourable lending terms to franchisees, so you don’t have to miss out on the best business opportunities.