Owning a Franchise
Much of your preliminary engagement toward the purchase of a franchise depends on your degrees of knowledge and experience in business management. The questions to ask yourself prior to committing to such an arduous pursuit include the following:
- Will you buy into franchise opportunities within your current career industry?
- Will you purchase an established location or secure a new build?
- Will you purchase a shop location in an area that you're very familiar with or are you interested in relocation?
- Are you selecting to conduct business in an industry of high demand, or would you prefer a business-to-business (B2B) firm that requires deeper versus a vast number of customer relationships?
- Will you approach this asset-liability venture as a family affair, or will you manage it alone with a hired team of professionals comprised of non-family members?
- Do you have considerable savings to sustain all of your and your family members' needs sufficient to cover a 5 to 6-year block of time? Or were you thinking you'd keep your current position as you start?
- Do you have a financial plan B if, for whatever reason, the business just never takes off to turn a profit? These are just a few fundamental questions but asking them of yourself well before you embark on this endeavor may help assess your mettle toward an apparent goal of franchise owner.
Where to Sell
For your division of the franchise, how do you plan to offer your goods and services, through what forum or format? Will you house your wares, i.e. product and/or equipment, in a brick & mortar facility? Will you use an open-air market? Or will you serve as a drop shipping outlet operating only through an online network? What will be the terms of your return policy or your service warranty?
Will you accept installment payments or partial payments until certain stages of work are completed? Or will you contract for full pay, full service? Is your product or service highly dependent on particular weather in order to succeed profitably? Is yours the type of business offering that 'only' attracts and retains clientele by word of mouth? Or must you heavily remind people of your existence and contribution to the marketplace? Or perhaps yours requires some happy medium in between and you've already discovered that magic algorithm via your past business marketing projects? Will you advertise using local billboards, snail mail, email, or digital social media platforms? Does your product or service correlate best with the thoughts and activities of a certain gender, specific career title, regional area, seasonal climate, or the concerns of parents versus nonparents? Are your sales and advertising strategies largely promulgated through a certain type of digital device and/or dependent on potential customers' frequent access through particular applications?
What to Sell
Will you become part of a franchise that offers large, high-priced ticket items, immediately consumed products, or something in between? Will you involve yourself in a franchise that's only locally or regionally known, or one with global recognition and reach? Will you offer long-term servicing agreements, or will your customers seek help directly from manufacturers versus dealers? If a type of other business isn't near your plant or shop, will that business topography hinder your sales, or your customers' enjoyment of what you proffer? Is the existence or relevance of your product or service due to expire from the hearts and minds of your target market? Or, alternatively, is it dependent on some other product or capability not yet patented? Will your customers' experience with your product or service withstand the test of time lending favorably to your reputation and future sales? Or will you have to depend on a new crop of partakers every year, fiscal quarter, month, day, or hour?
To Whom to Sell
How have you determined your target market? Are you assuming all others like yourself will overwhelmingly take on your product or service paying you handsomely for it because you greatly appreciate it? Or have you considered also advertising to potential clients whose characteristics lie outside of your demographics? What will be your access and delivery parameters and limitations, if any? Will you allow your customers to pay you via credit card, check, PayPal, or cash only? What type of security measures will you have in place to protect your customers' payment information? Will all of your sales have initiated through some particular internet channel or access point or will your target market typically engage in various media platforms which you'll need to employ? Will you offer discounts toward future sales or service for referrals by existent customers? Will you offer and moderate a club or blog space centered around your product or service?
What to Do Therefore
Once you have actively contemplated and mathematically analyzed all of the above questions for each of your entrepreneurial interests, commit to one product or service; not one general area within an industry but literally one specific product or service to start. Select the one you're most passionate about from among those projecting the greatest or most reasonable profit considering the degree of your desired hands-on participation. You will need to put in an exorbitant amount of time and energy as you take on new challenges bringing your franchise ownership status into fruition. If you have never successfully owned or managed a business, plan on spending your first 7 to 18 months utilizing your local or regional Small Business Administration (SBA) office with the objective of recognizing, assessing, developing and practicing all of the necessary skills to become a successful franchisee.
If you have seriously contemplated all of the above questions, the data for completing your foundational work should be clear in your mind and heart. Now your key fundamental steps will include creating a business plan on paper, producing a progressive cost analysis for your startup year and projecting 5 to 6 years each with its separate financial workup, and conducting another series of studies of your target market since you have chosen the franchise and location/market venue. Some studies will be based on existing customer behavior as noticed at a 'sister-franchise,' and others will attempt to predict future customer engagement based on expected business landscape. You will need these documents in order to secure a business loan. Then you will need them and proof of qualifying for an appropriate loan amount along with proof of savings and a healthy personal and business credit scores when you apply to represent a franchise by owning one.
Your appointed franchisee recruiter will apprise you of the rules, regulations, and standards regarding supplier contracts, ordering product, supplies and equipment, signage, hours of operation, hiring, firing, promoting, and advertising. You will want to know wholeheartedly before meeting with the recruiter the degree to which you desire to participate in the daily function of the franchise from the start and projecting forward ten years.
Though examined here separately, where, how, what, and to whom you will sell all interlock with such interdependence when it comes to starting a franchise business that contemplation requires concurrent reflection on them simultaneously at every juncture. Everything depends on all four. Which style of widget? How deep are the pockets you're aiming for? How can you convincingly access those pockets? Likewise, all marketing and advertising decisions are similarly intertwined. Investing in a franchise as your main source of income entails grave challenges regardless of the industry. Choose wisely and roll up your sleeves!