Do you have what it takes to be a business owner in today’s environment?
As with running any business, it takes a certain type of person to succeed in franchising. Do you have the skills required? Think about your strengths and weaknesses, your skills and qualifications, and your personal history.
Questions to ask yourself
Here are some questions to consider for anyone thinking about investing in a franchise business:
• Do you have the necessary skills and experience?
• Are you willing to work hard?
• Are you able to make tough decisions?
• Do you have enough money to invest?
• Do you have a good credit history?
• Are you willing to take full responsibility for the success of your business?
Choosing the right type of franchise
Once you’ve decided that opening a franchise is the right path for you, it’s time to find a franchisor to work with. With so many franchise businesses and market sectors to choose from, finding the right one for you can be a time-consuming and sometimes overwhelming process.
Whichever market you consider, the following are just some of the main types of franchise business available to you:
• Management franchise
• Retail and fast food
• ‘Van’ or ‘job’ franchises
• Investment franchises
Questions to ask others
Here are some questions to ask other parties which will help you through this process. And remember, before entering into any agreement, make sure you are happy with your research.
You should ask the franchisor:
• How long has the franchise been operating?
• Who are the directors and what background/experience do they have?
• Are they a member of the British Franchise Association (bfa)?
On the financial side of things, you should ask:
• How much does the franchise cost and what does this include? Is it cheaper or more expensive than other franchises on the market?
• Is the franchisor’s business system financially viable? Ask for audited accounts and discuss the data with an accountant
• Are there any minimum performance requirements? Do you need to hit a certain turnover and if so, what will happen if you don’t?
And when it comes to the market, make sure to ask questions like:
• Is there enough demand for the product or service? Have you conducted market research?
• Who will your competitors be and how will your offering compare? Will you be able to compete on price or quality?
Ensure you find out how many other franchisees are currently operating in the network. Get the franchisor to provide you with details so you can speak to other business owners and get a better understanding of what’s ahead of you. Consider asking them the following questions:
• How accurate were your initial projections in terms of turnover, or profit?
• How long did it take you to break even?
• Did you run into any unexpected fees?
• How regularly do you receive support from the franchisor and has it been helpful? How often do they visit you?
These are just a handful of questions that will get you thinking about the important things when building your franchise business.
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