What’s the Buzz on Franchising: 6 Tips to Finding the Right Franchise Opportunity
Once you’ve decided to make the exciting jump into business ownership, there are still many choices you’ll have to make to ensure you find an opportunity that’s a good fit for you. So where do you start? Director of Franchise Development, Austin James, shares six tips to help you narrow down your focus and find the right franchise opportunity for your goals.
Tip #1: Financial Investment
Every opportunity you consider is going to require an upfront initial investment. From the franchise fee to start-up costs, you should go into this understanding what level of investment you are willing, and most importantly, financially able to make. Most reputable franchise companies will share the initial investment on the website, but you can also find this information in item #7 of the Franchise Disclosure Document. Start by evaluating your financial position and setting the range you are comfortable with.
Tip #2: Evaluate Your Interests and Lifestyle
What interests you and what lifestyle are you hoping to achieve? For example, say you are a natural cook in the kitchen and owning a restaurant has been your dream. Are you willing to work nights and weekends? What have you considered about the “office” - will the opportunity require a traditional brick and mortar presence, or can you operate out of your home?
Beyond that, how are you envisioning yourself and your role in the franchise? Is it something where you want to keep your full-time job and run the business as a semi-absentee owner, with perhaps a hired manager to run the day-to-day?
What does the scalability look like in the opportunity? You may find that you will have the option to open different locations or purchase additional territories after opening your first.
Tip #3: Revenue Model
Many service types of businesses are based on a recurring revenue stream, which means you acquire the customer once and they are serviced on a consistent interval, or until they choose to cancel. Non-service businesses are going to have more infrequent or occasional customers, where you are waiting for customers to walk through your front door or for something to break so they can fix it.
Tip #4: What Are You Passionate About?
Is this a business you can see yourself working in and being passionate about? Through the course of the franchisor’s discovery process, you just may find a passion ignited within you that you never knew existed. And it may not even be about the specific service. It may be about how you can positively impact your customers.
Tip #5: Values and Culture
Look at the franchisors themselves - do their values and culture align with yours? Most franchisors will consider their franchisees to be part of the family, so you want to ensure this is a family you want to be a part of. Likewise, you will want to speak with some existing franchisees in the system to hear their experiences firsthand. A good franchisor will have high-touch support for franchisees throughout their life cycle, not just during the franchise awarding and training processes. Speaking with other franchisees can give you insight into what that support looks like.
Tip #6: Return on Investment
Bringing it all back to the finances, you will want to understand what your Return On Investment, or ROI will look like. How long should you expect to be operating before you break even or are profitable? It’s important for you to have realistic goals for this metric and have a long-term approach. You are building an asset, not taking a job. Looking at the “The Financial Performance Representation” which is the Item 19 of the FDD is another opportunity for you to see the performance of the system.
While the search for the perfect franchise opportunity can be exhilarating, at times it can seem overwhelming. Don’t forget, it’s the job of the Franchise Development Executive to break this down into smaller steps and answer any questions you have along the way.
Watch the full episode of What’s the Buzz on Franchising for a more detailed breakdown of these six tips to consider.