5 questions to ask yourself before buying a franchise
Buying a franchise and owning your own business, is not something you go into lightly – it is a big decision and takes a lot of time to think it through. We’ve put together the top 5 questions everyone needs to ask themselves before investing in a franchise.
1) What am I good at?
Ask yourself what your strengths are, what do you enjoy doing and what kind of industry do you want to go into. Do you like working with people? You need to know if you could work in a retail environment or in a service industry. Or do you prefer working alone, and would prefer to work from home?
Every business, and every franchise attracts different types of people with different strengths. There is something to suit each and every person. Someone who is thinking about opening a Rush franchise salon would need to be creative, thrive in a fast paced environment and have excellent customer service skills. It is so important that you choose a franchise where you will enjoy the work and believe in the product, but also to pick an industry where you feel you will be successful and ultimately run a profitable business.
2) Do you agree with the brand ethos?
In franchising, rather than starting an independent business you are buying a brand license so you are agreeing to work within the brand guidelines and formula you have bought into.
You should only invest in a franchise if you intend to use and follow their business system. If you want full creative control in branding and marketing then franchising may not be for you.
3) Do you have the right support?
Support is paramount when thinking about buying a franchise. Your family need to be on board especially when you are investing your own savings into this franchise. You may need to move location or work weekends, so you will need to take your time to think about the potential benefits this franchise could bring you and if you could realistically run a business alongside your family commitments.
4) Can I afford it?
All franchisors will need to know your net worth to know if you are seriously able to take on a franchise. In order to do this you need to be able to add all your assets together and subtract any liabilities (mortgage, credit card, insurance etc.) Calculate your net worth here
This will enable you to weigh up whether you can afford the initial franchise investment and work out what you are likely to get back on your returns.
5) Research! What is the company all about? What would be your business plan?
Start by sending an enquiry, meet with a member of the franchise team, ask as many questions and take time to think it over. Franchising is a business partnership so you need to be sure that you are willing to work alongside the franchisor and that they are a good fit for you. When thinking about buying a franchise, spend time researching everything about the company. You need to be clear of everything the franchisor will offer you and what your rights are as a franchisee in the Franchise Agreement Contract that you will sign.
Often in order to apply for a franchise loan from the bank, you will need to have an approved business plan. Good franchisor companies will work through your business plan with you, setting realistic targets based on their proven track record with company owned and franchise owned outlets. You should not feel alone in any step of the franchise process.