Making the decision to invest in a franchise business is one thing – figuring out WHICH franchise model to buy is a different story altogether.
The internet is chop-full of useful tips on how to choose the right franchise for you – and most of it is great advice. The challenge is that the path to choosing the right franchise will be as different for every prospective franchisee as the prospective franchisees themselves.
In other words, there is no standard boilerplate system for picking the perfect franchise to invest in. Never has been and never will be.
I’m sure that’s not what you wanted to hear.
The good news is that there are a few standard elements to consider when narrowing down your choices which can – at least – give you a head start. From there, it’s up to you, the people you surround yourself with, and your own unique journey….
Who Are You?
It should come as no surprise that you can’t run a successful franchise if your skill-set doesn’t match. While there are some universal talents and characteristics that are necessary for successful franchising, the rest vary by industry and trade.
The best place to start is by assessing the skills you acquired from the corporate world. Do you have cold-call and sales experience or has most of your work been behind a computer with very little human contact? Can you manage people, or are you better with day-to-day operations? Think about what your past work experience has taught you and decide which of those skills can be translated into the franchise world as well as which ones you WANT to translate into your new venture. Because, let’s face it, there are some ‘skills’ that you may not necessarily ever want to use again.
That said don’t neglect your other talents either – the fun ones! Think outside the box because it’s not always about what we typically consider ‘business skills.’ Maybe you’re great with children but you’ve never had the opportunity to work with them. Or, you might be a fabulous artist but you’ve never had a reason to use it in a work setting. Whatever it may be, chances are you have some abilities and talents that you could translate into a lucrative opportunity if paired with a franchise that matches.
What Do You Want?
Knowing what you want out of a franchise investment is very important. ‘Why’ you want to invest in a franchise and ‘what’ you want out of it are important to identify so that you can purchase a franchise that will ultimately help you reach both of these goals.
Let’s start with your ‘why.’ If you’re purchasing a franchise with the goal of building a residual income while you keep your day-job, then you’re probably going to be looking at different franchise models than someone looking to build their main source of income. In other words, if your goal is to buy a franchise that mostly operates on its own, then you need to carefully eliminate any franchise models that require you to be involved in the management. You’ll find that information in the company’s FDD. And, visa-versa, if you’re eager to get your hands dirty and be a boss, then choose a franchise model that encourages it AND matches your skill-set.
Next, consider your ‘what.’ What do you want out of your franchise investment? Some franchisees purchase with the goal of starting a legacy to pass on to their kids when they’ve grown. Others start with one unit with the ultimate goal of purchasing multiple units and building a small empire. Still, others simply want a small residual income to steadily boost their retirement accounts. This may, at first glance, seem irrelevant to which franchise you buy, but it’s actually quite critical. Every franchise model operates, grows and pays differently. So, if you don’t know what you eventually want out of the franchise business – and why – it can be almost impossible to choose one that is going to produce the results you want. If you haven’t done so yet, sit down and make out a list of goals for your franchise investment; why you want one and what you want out of it.
What Can You Afford?
Once you know who you are and what you want, it’s time to crunch some numbers and consider how much you can afford. Franchise start-up costs can range anywhere from $15,000 – $500,000 and more. And remember, it’s not just about the start-up costs. Like any good business, you likely won’t break even and start making a profit for at least the first year. You need to make sure that you not only have the start-up costs to buy the franchise, but also the resources and funds to sustain yourself while it gets off the ground.
Along these same lines, consider how much of a financial risk you’re willing to take. Some franchise models are more solid than others. However, some of the riskier franchises – mostly because they’re new or cutting edge – also hold the most profit potential. If risk isn’t your thing and you’re looking for a more solid investment, then it’s best to avoid the newer or unknown franchises and choose a model that has had steady growth and still shows good projections for the future.
Last, but certainly not least, choosing the right franchise model generally requires some knowledgeable advice. Here are a few helpful resources to try out:
• The Franchise King – Known as the Franchise King, Joel Libava has been guiding prospective franchisees to franchise success for years. Follow his blog for valuable tips.
• Franchise Times – If you want to be part of the franchise industry, get involved in it. See how it works. Learn the people in it. And follow the news to see what’s happening.
• 10 Things to Know Before You Buy – This valuable guide will walk you through the 10 most important things to know before you invest in a franchise opportunity. It’s free. It’s easy to read. And it will help!
Tell us what kind of franchise you’re considering buying into and how you narrowed down your search!