How To Buy A Franchise To Replace Your Job
Buying a franchise offers a powerful alternative to full time employment and can give you a great feeling of achievement, too. Many people who lose their jobs, especially in a recession, will consider buying into franchising. This will probably be leap of faith you’ll make in your career - from employee to self employed.Whatever your situation, the big question is how to invest in a franchise?
Begin searching by visiting a franchise expo. There’s a wide range of franchising options, from self-employed roles which is like investing in full time work for yourself on a steady income, right through to owning multiple franchise outlets and creating a real group of businesses that run successfully without you.
They say that past performance is the best indicator of future results, so check how other franchisees are getting on before you think about signing up for yourself. You want to make sure that your franchise investment is made wisely and doesn’t depend upon you being a superstar amongst all other franchisees just to succeed. That’s why you’ll want to speak with a representative sample of other franchisees to see what the average performance is like.
A useful yardstick when choosing a franchise is to pick something you’ll really enjoy. Just because it’s your own business, it doesn’t mean that money alone will be a great motivator for you. The best businesses create raving fans, clients that buy again and again from you, so ask yourself if you can easily create a raving fan for a business that doesn’t excite or interest you, except for the money, before you buy it.
Get in touch with lots of franchises to keep your options wide open and your negotiation position strong, especially at the start of your search for a business. Don’t leap straight into the arms of the first one you meet, check them all out. It’s the quality of relationships that will largely determine your success - the relationship you have with your franchisor is very important - so make sure it’s somebody you respect and can enjoy working with.
Here’s a checklist for you of things to consider when you’re buying a franchise.
1. Remember that the franchise cost is generally a lot higher than the amount you pay up front. Try to find a franchise that ties the success of the franchisor to the success of the franchisee so that you will get quality support to succeed.
2. Running your own business can be an expensive game; ensure that any figures the franchisor shows you give realistic costs and customer sales values. For example, one franchisee with a turnover of ,000 per month was barely breaking even because of a high fixed monthly franchise fee, ineffective but expensive marketing and staff salaries. The same franchisor was happy to quote ,000 turnover as being typical, but was a lot less happy when the costs were revealed.
3. Educate yourself about franchises before you buy - you’ll be in a fairly tight contractual agreement once you’ve signed and it pays to know what you’re doing - the price of ignorance in business is huge.
4. Franchise agreements are almost always written with impenetrable legalese that you’ve got no chance of understanding unless you’re a lawyer - you might want to reflect on why they do that, too! The franchise wants you to sign up to their conditions because it stacks the odds in their favour in any dispute and transfers as much risk in the business to you, rather than the franchisor. Don’t sign up for more than you’re comfortable to agree with - this is a lot of money and a long term contract. The final word is that you appreciate the facts behind your franchise agreement before you sign it.
5. Don’t skimp on your research. Be prepared to spend some real time working out your own strengths and discovering which franchises will suit you.
One final thought for you. Beware the small proportion of franchisors who are just out to squeeze you for all they can and don’t care about your success. The Pareto Principle is a fair way to think about most things in life - there’ll be about 20% of the franchises that you should steer well clear of. A reasonable rule of thumb is that any organisation that has very slick sales technique and that’s making you jump through a few hoops during conversations with them are using advanced sales techniques. These may be a good sign of great training and systems, or they might be indicators that the franchisor is slightly too sharp and that’s a warning sign to walk away, unless you’re really comfortable with the thought of building a relationship with them.
Mail this post