So you’ve decided to go into business for yourself and after all your research you have decided that a franchise is the best fit for you and your family.
Franchises are great because some of the risk is eliminated through having a tried and tested business model and people who have been there, done that to guide you. Most reputable franchises will have everything you need in place already except the customers and if you are buying an established franchise you will most likely get them too. Things such as computer systems, advertising, uniforms, training, shop layout, equipment, pay rates, fee structure, operating hours, even stock are generally all controlled and regulated through the franchise.
A franchised brand needs to be the same everywhere you go, each shop you walk into regardless of location should feel, look and operate the same as any other of the same brand. This is one of the biggest aspects of running a franchise and something you need to be ok with, there is not a lot of room for self expression or adaptation and you need to be able to operate within their guidelines of uniformity. This can be of great help to those just starting out in the business world who thrive on the support, structure and guidance that a franchise can offer. When everything is already in place this means it has been tested, tweaked and altered to fix problems and give the customers the best experience possible and what you are getting is the polished product.
This does not guarantee success, but this level of structure is designed to give you the best chance possible, the head franchise doesn’t want you to fail as this looks bad for their brand. You will find most franchises have a support network available to new owner’s, through the head or state office and through other franchisees in your area. This means you have someone to help you through problems, bounce ideas off and guide you as you learn what the business is all about and find your feet.
The most important thing to consider and understand with a franchise, is how much of your earnings will be going to the head franchise. What percentage of your profit is going to be paid out in franchise fees, royalties and any other payment structures to those above you. You still need to speak to 3 very important people before purchasing or signing anything, as with any major purchase get professional advice.
- An accountant – needs to look over all the financials of the business so they can advise you about what you’re getting into and can discuss how royalties will affect your income. It’s great if they know your circumstance too so they can guide you on what you need financially to succeed and what your tax responsibilities are.
- The bank – You will most likely be borrowing money to do this, shop around, seek advice, ask heaps of questions and make sure you get the best deal to suit you and your franchise. Even if you’re not borrowing money you will still need things like transaction accounts, merchant facilities and credit cards for day to day operations. Most franchises will have banks that they deal with, you don’t have to use that bank, but the pre existing relationship may make things easier as the bank will already understand your needs and may even have special packages or rates for franchise owners.
- A lawyer –Purchasing a franchise will come with a contract full of heavy legal language, get it looked at by a lawyer and make sure you understand it too. Lawyers are expensive, but worth every cent if it stops you getting ripped off or burned financially with a dodgy contract of sale, especially where royalties are concerned.
If after all this advice you decide franchising is for you, then go for it and find one that suits you. There are so many businesses franchising now almost every industry has franchise options available.
Do you think franchising could be for you? Have you bought one before? What was your experience like?