Franchising is "big business." It is what drives national brands and makes them globally successful. It is what allows you to eat at a McDonald's or a Burger King anywhere around the world, and know that the quality and the product will be about the same in any location. It is at the heart of every major business that wants to make its mark in the world. But what type of person does it take to run a franchise and make it successful?
According to well-known finance author, David Bach in Start Late, Finish Rich, you should consider how much you want to control your business to decide whether or not you would be a good match for owning a franchise. Here are a few other tips to consider:
1) Consider the business model. A franchise operate with the notion that it will emulate the other thousands of stores which also carry the name of the big business. A Target in Seattle, Washington should be the same as one in Miami, Florida, for example. There are sometimes allowed slight variations in how it looks, such as the decor and the general personality of the local business, but in general it should be like all the others.
2) Consider your personality. Are you the creative type who likes to do your own thing? If you are a very creative person, you may not be happy with a franchise. Because of the nature of the business model (see #1), you are only allowed a very limited amount of creative freedom. Franchises, in that way, are not true entrepreneur opportunities. Instead, they are opportunities to buy a store owned by someone else. You are riding on someone else's dream, and piggybacking on their profits. It is not your idea, and they generally do not want your ideas. So ask yourself if you are happy operating someone else's business for them in your local area. Because that is exactly what you will be doing.
3) Consider the cost/investment. Most franchises cost between $50,000-$200,000 to start. In general they are on the lower end of this scale, but it depends on the company, your location, and the way they deal with franchises. So think about whether you have this sort of start up money before you start. Also, you will have to decide whether you want to lease a building or buy one. All of these things need to be considered before taking on this kind of investment.
4) Consider the working environment. Some people buy a franchise, then they are surprised to find their back doing a job that resembles something they did in high school- flipping burgers, etc. The franchise owner needs to be present in the store at the local level as much as possible. So if you are not someone who works well with others and enjoys the environment of the fast food place or store you are franchising, you may run into difficulties in the day-by-day operation of the business.
5) Consider your long-term goals. Before you buy into a franchise, ask yourself if this is what you want to do for a long time. Many people are perfectly happy operating a unit of someone else's business indefinitely. Others are not. They want to create their own dream and market it instead. Think long and hard before you commit to operating a franchise. It's not something to be taken lightly because it is generally a big commitment to make it a success and your goals and those of the corporation must be one and the same.
Benefits of Franchise Ownership
Franchise ownership can be very rewarding. You get to learn from the inside out how the big companies operate, and operate one of your own, based on their principles of business. It can be very educational for business people to learn and the profits can be good. However, if you have your own ideas on how to run a business, a better idea would be to start your own. You have limited say into the decisions and plans of a franchise, since it is owned by someone else. You are really nothing more than another arm of a well-established business. Still, many people enjoy what they do as a franchise owner. They like not having to come up with constant ideas on how to make money. All of this is already thought out for you by the corporate office. If you think you would too, focus on a company you really like and make it happen.