So you’ve landed in the franchise market place….
Some times it starts with a boss yelling at you on a Monday the wrong way….or possibly a disappointing bonus check you received or just the notion that it’s time you get out and hang your own shingle instead of making money for someone else all the time. Whatever go you here, you have decided to purchase a franchise as opposed to starting your own business and are not sure where to start. The process can be overwhelming for many prospective franchisees, in some cases just due to the large volume of franchise brands and franchise industries to consider.
We would recommend the following steps when considering a franchise investment:
1. Get a good understanding of where you are financially, timeline-wise and from an interest standpoint. You need to assess not only yourself, but your financial position, what kind of cash you have in place, what is your liquidity, what is your net worth? It is important that you have an accurate personal balance sheet when you go to market beginning to research the franchise marketplace. Knowing your budget from the outset will help narrow your options to the type of franchise you can realistically afford and limit the annoyance, time and wasted efforts of looking at franchise businesses you have no ability to open or invest in.
2. Know who YOU are. Before selecting a franchise brand or concept you need to fully understand your own interests, background and business abilities. What types of jobs have you held in the past and what did you enjoy about them vs what did you do well with professionally? What are your hobbies and interests outside of work or professional life? What are your strengths and weeknesses from a business or personal standpoint? Have you ever managed employees or supported a staff…..were you good at it and did you enjoy it? Do you like working with people, or do you do better with numbers or technology? Assessing your interest and skill levels will enable you to select a franchise business at which you will be most successful. The beauty of franchising is that there are so many different franchise brands, businesses and industries out there that you can find something that fits your interests ideally if you give it time and truly “audit” yourself.
3. Research the market and as many franchise opportunities as you can. Unless you have a specific company in mind or are using a franchise broker or consultant who is helping you through the process and researching, this could be a lengthy, frustrating process. There are dozens of franchise Web sites and thousands of franchise opportunities out there. Start by flipping through the franchise websites and what is available online, there are many sites out there which provide a wide varity of information on franchises. In addition, there are franchise tradeshows in most markets you could attend virtually anywhere, any time. When researching concepts you will need to consider your market and the demand for a specific product or service within that market. If the target market is oversaturated with a concept or the idea is too progressive or different to be accepted in that community, you will have to keep on searching until you find the right concept. We recommend that you pull a wide variety of FDD’s and Franchise Disclosures as possible to review all detail and information on the concept and franchise program. Speak with a qualified franchise consultant to review the contents and disclosed items within the FDD.
4. Research your financing options. Once you have made your selection, you may need financing….in fact, even if you don’t need financing, it’s good to understand what your options are and what capital/cash is available for you should you need working capital or resources to launch your franchised business. There are numerous options, including conventional bank loans, SBA guaranteed loans, 401k rollovers, alternative financing channels and home equity loans. Some franchisors offer their own in-house financing or can refer you to third-party lenders. Contact us for information on FRANCHISE FINANCING
For more information on how to invest in a franchise and make the right franchise buying decision, CONTACT US to speak with a qualified franchise consultant to review your investing options and possible FRANCHISE BRANDS.