Buying a franchise is an easy way to start running your own business, with a better chance of success than starting a business from scratch. Our guide will help you choose the right franchise that best suits your needs.
From fast food restaurants to mobile dog grooming, the sheer number of franchise opportunities on offer can be overwhelming. And with each franchise requiring a different level of investment in terms of money and time, choosing the right franchise for you can be a challenge.
Selecting the best franchise is also more than just a financial or market question. You need to be pick the right franchise that suits your personality and approach to work – operating a fast food restaurant is a lot different from running a stage school for children. Choosing the wrong franchise can be a costly mistake, so it’s important to take the time to consider the factors that will make your business a success.
The following steps will help you to narrow options and choose the perfect franchise that suits your working goals.
1. What do you want from a franchise?
Take a step back and consider what you want to achieve by investing in a franchise business. Are you looking for a part-time opportunity or something you can do as a hobby? Or will it need to replace your salary as an employee? Do you have ambitions to own more than one franchise at a time? Be brutally honest when answering these questions – finding the perfect business will be easier once you decide what you’re trying to accomplish.
2. How much money do you have to invest to start a franchise?
The amount of money you have to invest will more than likely determine the franchise opportunities available to you. Be realistic when working out your budget. Like most businesses, a franchise takes time to be profitable, so make sure you’ve enough money to live on until then. If you’re looking to raise finance, talk to a lender that specialises in franchising.
3. How much can you risk?
Consider the level of risk you’re willing to handle, as this will help eliminate some franchise opportunities. If the franchisor fails, your business will suffer too. If you’re risk averse, you may prefer a long established, big-name company over a cutting-edge franchise despite the promise of more return on your investment.
4. How much time will you invest?
It’s important to find a franchise that fits the role you want to take on. Only a few franchises offer the chance to be an absentee owner and hire staff to manage the day-to-day business, most require hands-on involvement. Think about family and other commitments, and decide how many days and hours you’re willing to work. Like any businesses, franchises often require owners to put in long hours to achieve success. Deciding you only want to work weekdays 9 to 5 will eliminate many retail and services franchise opportunities.
5. What’s your exit strategy?
Often overlooked by potential franchisees, this question can be essential in helping you select the right franchise. Most franchises agreements last five years with two automatic renewals, others last ten years while some big name food franchises with premises such as McDonald’s, Burger King and KFC last for 20 or 25 years. Do you intend to run the business for just a few years before returning to paid employment or moving on to something else? Or are you looking to build a business over several years. As there are often restrictions on selling your franchise, answering this question will help avoid future problems.
6. What are you good at?
Buying the right franchise is similar to looking for the right job. Evaluate your skills, experience and personality to find the right match – although there’s no need to limit your choices to just the sectors you’ve worked in previously. Consider whether you want to work alone or with others and whether you enjoy interacting with customers and managing staff.
Once you’ve answered the above questions, you can start to look for franchise opportunities. The British Franchise Association provides information and support for running a franchise along with a list of franchisor members. Visit a BFA franchise exhibition – typically held in London, Manchester and Birmingham – to discover more franchise opportunities.