How do I know if franchising is for me?
By asking a lot of questions—of yourself, and of the Franchisor.
Franchising allows you to trade under the Franchisor’s name, trademark and system without you going to the expense of creating such a business from scratch. He’s spent the money, made the mistakes, and now he’s got the bugs out of the system. If it works for other franchisees in the network, it should work for you.
But will it? Have you ever run your own business before? Are you a good manager, well organised and able to multi-task? Are you a leader with strong team-building skills? Are you a good communicator? Can you sell? (Because every franchise involves sales and marketing.)
Above all, are you motivated, committed and driven by a desire for financial success?
You are? Then franchising could be for you.
You need confidence in your own ability to succeed. You need to say to yourself “I will make this work” knowing that running your own business is not easy (especially if you’ve never done it before) and there will be issues along the way.
Not everyone is cut out to be a franchisee. The Franchisor will train the newcomer and provide ongoing support, but don’t expect the Franchisor to run the business for you. The success of the venture will depend on your own enthusiasm and hard work.
I advise people seeking a franchise opportunity to look at businesses within their comfort zone—i.e, to look at an industry they know something about or have worked in previously and enjoyed. There are many types of franchises out there so choose one that reflects your interests and personality.
Be informed. Go to franchise exhibitions, talk to Franchisors, read their prospectuses and financial projections. Talk to franchisees already in the system. Ask them about the quality of training and support you can expect.
Don’t chose a restaurant or a coffee bar if you’ve no experience in the catering trade. The learning curve is so great it might ruin you. Choose something which offers the right work/life balance with proven earnings potential. If you prefer working normal hours then a franchise in the retail industry might suit you best. If you want to work from home there’s a huge variety of home-based opportunities out there to choose from.
Then there’s the question of funding. Apart from the initial franchisee fee you’ll need working capital for wages, stock, advance rent (perhaps key money, too, if you’re buying a lease on a retail outlet.) The outlay could be substantial. Can you afford it? Do your sums and, if necessary, talk to your bank about a loan. All banks like franchising because there’s less of a risk involved: while you may be just starting, the brand will already be successful and you’ll be able to show projections based on what other franchisees have achieved.
Make sure you understand the franchise agreement. It sets out the responsibilities of both parties. It is a legal contract. Don’t sign it unless you intend to honour your obligations.
Franchising is a fabulous business, but you need to go carefully and get advice from friends, family, and relevant professionals, especially a solicitor who will check the franchisee agreement to make sure it is legal.
By Tony Fitzpatrick, Managing Partner, www.franchiseyourbusiness.ie