Are you thinking of starting your own company even though you don’t have any professional business experience? This can be a very daunting sector to move into if you have never had any roles of responsibility or managerial positions within a company yet. But don’t worry; there is a great way you could set up your own company without going it alone – you can simply buy into a franchise.
There are lots of companies that operate the franchise business model, and you might not even realise it. Just take a look at some of the big fast-food companies, for instance. The likes of Burger King, Subway, and McDonalds are all franchises and each branch throughout the world is owned and ran by a franchisee.
So, what exactly is a franchise? Simply put, it is when you buy into a business and get to use their name and marketing materials. You will also be given training in running a franchise as well as plenty of help and support when it comes to getting your branch all set up. As you can see, then, this is a great way for people to run their own business without too much experience behind them. After all, they will be able to set up a company that is already instantly recognisable and has a world-renowned branding, so a lot of the hard work that usually comes at the beginning of a company’s life, such as increasing brand visibility, has already been done for you.
Does buying into a franchise sound like something you would like to do for a career? Don’t forget that there are a few disadvantages that you will have to consider along with all the usual advantages. If you are finding it hard to decide whether to go with it or not, here are some useful tips to help you decide.
Questions To Ask Yourself
Which Industry Should I Look At?
First of all, and probably more importantly, you need to consider which industry you would want to look for a franchise. Even though I have already mentioned a few big names that are in the food and restaurant industry, they aren’t the only ones that you can think about. Retail is another big area for franchises, as are maintenance, pet care, and the hotel industry. Chem-Dry cleaning franchises are also proving to be highly popular as well right now. In fact, there are so many different franchise opportunities in various industry areas that you should have no problem finding a sector that appeals to your interests and business tastes.
Do I Have Enough To Live Off Before The Franchise Breaks Even?
Even though you will be helped considerably to set up the franchise, you also need to be aware that it still might take some time until your branch starts to make a profit large enough for you to love off. This is the case with any business; franchises aren’t immune to slow sales at the beginning of their lifespan just because they benefit from a trusted brand. So, you need to ask yourself whether you will be able to stay afloat while you are working hard on your franchise branch and trying to turn over a profit from it. Thankfully, there are some franchisors out there whole will provide you with a substantial amount of start-up capital to help you get your business up and running and ticking over in the first year. However, this fantastic financial support won’t be on offer with every franchise. If the one you choose isn’t quite as financially supportive as you would have hoped, you will need to make sure that you have plenty of savings in the bank to live off. Otherwise, you might need to rethink your decision as you may not be able to afford such a franchise.
How Strong Is The Potential Franchise?
How successful do you think your chosen franchise will be? Sure, there are some internationally renowned ones, such as McDonalds and Burger King, that do exceptionally well. However, they aren’t all like this. Not all franchises do as well as each other, so it’s necessary to research the ones that you are considering to try and get an idea of whether they have the potential for longevity and success. Most franchise’s books and accounts will be publicly accessible. If you are thinking of applying to buy into one, you should contact the company and request their books. If you can’t tell what all the numbers mean, you might be better off showing them to an accountant. They will be able to tell you whether the forecast is good for the franchise!
Questions To Ask The Franchisor
What Is The Background Of The Finance?
It’s a good idea to find out a bit of information about the franchise as a whole. Who set up the company? Why did they decide to operate as a franchise? Are the original partners still connected to the business? What kind of systems and support are in place for all the franchisees? When you have all of these answers, you will find that you get a better feel for the company as a whole and will be able to work out whether you would be a good fit in the business.
The franchise business model has been used by global brands as a popular and globally proven strategy for business growth and rapid expansion. Here are a few tips to note: https://t.co/4uPOgKRX1A pic.twitter.com/Gu4gaLGioX
— FATE Foundation (@FATEFoundation) May 22, 2018
What Is The Initial Investment?
One of the things that most concerns potential franchisees is the size of the up-front investment that they need to pay in order to buy into the company. Some franchises only ask for a small amount, while others will ask for quite a substantial initial deposit. Some companies might even offer to cover some of the main start-up costs, such as renting a property and buying essential equipment. Generally speaking, if the first investment is quite high, your regular payments thereafter won’t be too expensive. So, as you can see, it could sometimes pay off to go with a franchise that asks for a high initial investment.
Are There Any Ongoing Fees?
You will need to pay royalties to the company that owns the franchise. This is so that you can continue using their branding and name. Generally, royalties tend to be a percentage of the monthly profit that your branch makes. However, every franchise operates differently, so it’s worth double checking this before you sign on the dotted line. When you find out what the fees are, you need to work out if you would be able to survive on the money left over. If not, then there is no way that particular franchise is going to be viable.
Is There Any Support Beyond Initial Training?
Every franchise company will offer its new franchisees some initial training to get them up and running in their new branch. But all good franchisors will then offer you plenty of support beyond this initial training. They might offer you regular training opportunities or help you by stepping in whenever things get rough. Work out what kind of support you can expect from them – if it doesn’t sound adequate, you might want to walk away.
How Will My Territory Be Protected?
Every franchisor will be given his or her own specific region or territory to cover. For instance, if you set up a restaurant branch, then no one else should be able to set up too close to you or else they will steal your business. Find out how your territory will be protected, as not all franchisors guarantee their franchisees’ regions.
So, do you think setting up as a franchisee sounds like your kind of thing?
Want to learn more?
We’re here to help you to take action just like we’ve helped thousands of other entrepreneurs, business owers and creative professionals all around the globe.
Now is the time to let your passion SHINE.
Now is the time to Make Tomorrow Today!
To your success,
Vinh Van Lam & Stuart Horrex
Your Creative Coaches @ CoSydney & ArtSHINE industries