Those with an entrepreneurial spirit typically dream of starting their own business, and it’s not hard to see the appeal. You essentially get to be your own boss, work hours you set, see your ideas come to life, and know that you made it all possible. As enticing as the dream is, it’s also a difficult road paved with all manner of challenges.
No matter what you do, there’s no way to guarantee the success of any business, and nearly 22% of startups fail in their first year. However, you don’t necessarily have to start a small business from scratch in order to be a business owner, and there are several advantages to owning a franchise business. For one thing, you’ll be working with established products and an already present customer base instead of having to build it all yourself. You’ll also have training and support from a large business network, so you’ll likely have an easier time getting started. You may even be able to purchase your goods for cheaper prices compared to a startup thanks to the buying power of your franchisor.
Of course, you won’t have as much flexibility as a franchisee as you would with a new business of your own, and you’ll be sharing profits with the franchisor. You’ll also have to stay in good standing with your franchisor if you hope to be renewed. If starting a new franchise still sounds like something you’d like to do, here are some of the most important things you’ll need to get ready.
Network with franchisees.
One of the best things you can do to prepare yourself is to speak with others who own franchises in the chain you’re considering. It’s commonly believed that franchise businesses rarely fail, but they’re just as susceptible to risks as any other business. There will always be initial fees for becoming a franchisee, and there are generally some ongoing costs as well, such as royalties and marketing fees. One of the best things you can ask another franchisee is whether or not they had any hidden costs, such as or maintenance for their building. The last thing you’d want is to stretch your budget thin and then realize you need to hire a roofing contractor for a roof replacement.
This is also a great opportunity to ask franchise owners whether they struggled with their new business. Determining the biggest challenges for franchise businesses and getting advice on how to overcome them can give you a big advantage.
Determine the franchise’s value.
In order to calculate the value of a franchise, you’ll need to know all the fees you could owe to the franchisor or their affiliates. These of course include the initial franchise fee and typical ongoing fees. Depending on the franchise, though, you may be required to purchase equipment and services directly from the franchisor, and you need to be aware of these costs. These will be covered in the franchise disclosure document, so you can make sure you can afford them. Also, be on the lookout for any unusual fees in the document, and ask the franchisor about them before accepting the deal.
Explore franchise financing options.
If you’ve found any franchise opportunities that you think are good deals for you but lack the capital to cover the costs right away, you can always look into franchise financing. Expert financers have years of experience working with small business owners and franchise owners and can help simplify your SBA loan process. Lenders can also help borrowers with traditional bank loans, unsecured and secured business lines of credit, consumer business loans, and equipment leasing for franchises.
No business is a sure-fire success, but if you can afford the franchise fees, becoming a new franchise owner can be an easier road than starting from scratch.
