If you are considering going into business for yourself, buying a franchise is an option you may want to look at. With a franchise, you buy a successful company and have the freedom to run it. You also get a support network, but you have to play by the parent company's rules. Here are several things to consider when investigating buying a franchise.
1. What would you like to do?
See what is available and what you would like to do. There are hundreds of different businesses you can get into. See the list of the top 100 fastest growing franchises to get some ideas what types of businesses are available. Although most people think about a restaurant or food business when they say franchise, actually 6 of the top ten fastest growing franchises are commercial cleaning businesses.
2. Franchise Start up Fee
All franchises require a start up fee. In some small cleaning companies, this fee can be less than $5,000, depending on required equipment and training. On the other hand, if you'd like to own a McDonald's restaurant, be prepared to pay over $1 million. Credit is tighter these days than it was a few fears ago, and franchise startup lending is viewed as risky, so investigate how much you will need and how you will be able to finance startup fees you will need.
3. How much control do you want?
In a normal 9 to 5 job, you don't have too much control over how the business is run. Many people like the stability of doing the same thing every day and getting a predictable paycheck. That model is stifling to others, though, and they crave the freedom to run their own business. With a franchise, you control how the business is run, while operating within the structure, and with some support, of the parent company. A franchise gives you a large measure of control, but also povides a safety net of training and maybe supply, equipment and procedures.
4. Training and support
All franchise 'packages' include training and support that you pay for with the start up fee. This is one of the reasons that franchises are much more successful than small businesses. Statistics show that more than half of small businesses fail in the first 3 years, while more than 80 percent of franchises succeed. You are buying a proven business and getting training and support to make it succeed. Find out how much training you get up front, and how much ongoing support you will receive from the parent company.
5. What Kind of Income Can You Expect?
When starting any business, including a franchise business, a steady income may take a while to develop as you get the business off the ground. There may not be any income for a while, so you need to consider whether you have enough of a reserve to live on until you get the business established and running. With a franchise, you have the safety net of the parent company. Their size and buying power may enable you to get supplies more cheaply than as a stand alone business. Keep in mind, though, that you will pay the franchisor a share of ongoing profits as well.
There are many other things you will want to look at before you make a committment to buy a franchise. In The Franchise Handbook, Robert Hayes talks about putting a business plan together, doing a market analysis, and what you should know about business taxes before you buy. I hope this short article helps you on your journey to being a successful business owner.