So you’ve decided that buying into a franchise is right for you, but you’re not quite sure where to start? To make things easier, focus on these five key steps to get started on the path toward franchise ownership.
Play on your strengths
Before you get into the nitty-gritty details of franchise contracts and financing, it’s important to evaluate how you will fit within the world of franchising, and what strengths and weaknesses you will bring to the table. Really be honest with yourself about your own interests, employment history, and business skills. Are you a born leader or do you like to defer to those higher up? What are your hobbies and can these translate into a satisfying business venture? Do you like working with people and do you have any experience in business management? By becoming aware of your own aptitudes and skill set, you can choose a franchise within an industry that will best suit your personal needs and where you will become most successful. Additionally, by identifying your weaknesses early on, you can take the time to improve on them or even hire someone else who can offer these assets to your team.
Do the detective work
If you don’t yet have a specific franchise opportunity in mind, you may spend months of research before you find the ideal franchise model to suit your needs and interests. On the internet, there are many websites offering up information on hundreds of available franchise opportunities, and trade shows can be a great way to meet up with franchisors one on one. The key thing you have to keep in mind is the demand on the market for the product or service each franchise is offering. If the demand isn’t there or the market is oversaturated, then no matter how great the idea, it still won’t put money in your pocket.
Schedule a financial check-up
Before getting in too deep, take the time to go through your finances and evaluate your current net worth and whether a franchise investment is something you can pursue. Discover the ins and outs of your financial position including your liquid assets, credit score and how much money you’re willing to spend or borrow in order to get your franchise business plan off the ground. If you have a realistic budget in mind from the beginning, this will help to hone your options and direct you toward the franchise best suited for your current financial situation.
Narrow your focus
Once you’ve done some initial scouting, it should be easy to choose a few potentials from the bunch to go in for a closer look. Gather Franchise Disclosure Documents from every company you are considering and study up on their history, financial statements and contracts with your franchise lawyer and accountant. Also, contact other franchisees and see what they have to say about their experience working with the franchisor. By bringing in these experts early you should be able to identify which franchises have the greatest potential for success, and are best suited to your particular needs.
Find your financing
If you’ve found yourself the perfect potential investment, then it’s time to examine the options available to fund this project. From bank loans to home equity loans, you will want to consider which option will best fund your franchise development and keep you topped up until you can turn a decent profit, which could take anywhere from months to years. Meeting with a financial advisor can be a helpful step toward narrowing your focus down to what will work best for you.