Think you’re ready to choose the right franchise investment for you and your family? Before you jump in, it’s imperative to have all the facts.
It’s wise to approach your prospective corporate partner or other franchise owners with questions about the brand to get a better view of what your experience might be like.
Use the following list of questions to ask yourself, your corporate partner and other franchise owners before making a huge commitment.
1. What are my goals for franchise ownership?
The prospect of buying a franchise entices many entrepreneurs because it’s an opportunity to achieve personal and professional goals. The first step in choosing the right franchise is outlining your objectives.
What do you actually want to accomplish by purchasing a franchise location?
Some goals align well with franchise ownership, like better work-life balance, greater professional autonomy and long-term growth opportunities. Others, like quick return on your investment or a light workload, are not a good match.
2. Are my finances in order?
This is a key question in the decision-making processes. Will your finances support a franchise investment? Having enough money to cover the initial franchise investment is essential, but it’s not enough. You also need money to cover basic living expenses for your family in case it takes time for your franchise location to turn a profit.
Talk to the corporate partner or other franchise owners about the average time it takes for a location to become profitable. You may want to consider having six months’ or a year’s worth of living expenses in savings before buying a franchise.
Be honest with yourself: If I lost every penny of the investment, would my family be OK? Also, consider consulting a financial advisor – ideally one with franchise experience.
3. What is the reputation of the franchise brand?
Brand is everything – and when you buy a franchise, you’re buying into that brand. Evaluate its reputation from a couple different angles, starting with consumers:
- Do the products actually work?
- Are consumers happy with their purchases?
- Have they had positive experiences with the corporate partner or other franchise owners?
Next, assess the franchise brand from the perspective of franchise owners: What is their franchise relationship with the corporate partner like? Talk to other franchise owners under the brand’s umbrella about the challenges and benefits they’ve experienced while working with that corporate partner. Be wary of brands that have a high number of lawsuits or weak franchise relationships with owners.
4. How many of the franchise’s locations were failures?
You don’t want to make an investment in a franchise brand that has a high failure rate. If many franchise locations have failed, especially in your area, pay attention to this red flag. Try to contact former franchise owners whose locations have closed. Ask about their experience and why their location went under.
Also, talk to your potential corporate partner about any challenges their franchise owners normally face that might cause them to close their doors. Is the common problem location selection or poor management? There are many reasons why a franchise location might close. You want full visibility into the risk you’re taking before you put down your investment.
5. Is the corporate partner supportive?
Having a healthy franchise relationship with your corporate partner could mean the difference between a successful, positive franchise experience and a challenging, unrewarding one.
Ask your corporate partner about the support they offer and how they maintain positive franchise relationships beyond the initial investment and location setup:
- Is there ongoing franchise training for owners?
- Is there any level of mentorship?
- Does the corporate partner offer marketing or accounting guidance?
You may not be an expert in every area of franchise ownership, so might need to count on your franchisor to fill in the gaps. Look for one who’s supportive beyond your investment and values a strong franchise relationship with owners.
6. Is growth in my future?
Before you buy a franchise, talk to your potential corporate partner about growth opportunities. Your first objective should be personal financial growth stemming from a profitable franchise location. But, a secondary goal may be expansion.
Ask about whether franchise owners often open multiple locations. Many franchise brands discourage owners from doing so in their first year of franchise ownership, which is a wise approach to growth. But, they may have an idea of a potential growth timeline for you.
If one of your franchise ownership goals is growth, discuss the opportunity for future expansion and get your corporate partner’s feedback.
7. Am I ready for the commitment?
Ultimately, the most important factor you must determine before buying a franchise is whether or not you’re ready to take this step. Franchise owners put out a lot of time, energy and money to make it work. But, if you have the drive, if the investment aligns with your goals and if you’ve found the right corporate partner, you’re ready to jump in.
Have more questions about franchise ownership? Schedule a free consultation with Relax The Back for guidance on finding the best franchise opportunity for you.