Looking to get into the franchising business? Whether you’re going through a career change or are just searching for a new opportunity in life, franchising could be for you. But how do you know what would work best for you?
There are thousands of different types of franchise businesses you can buy into, each varying in time and money investment. With so many options, it can be hard to determine the right opportunity that will give you a greater chance of success and happiness.
Follow these tips on how to choose a franchise business:
Ask yourself this
“What am I trying to accomplish?” You need to determine whether you’re starting a franchise as a hobby, you’ll be working full time or it’s just going to be a side gig. Determining what you want to get out of your franchise business is the first step to figuring out the right franchise for you — it will lead to answers to other questions, like whether this will be the source of all your income or whether you foresee owning more than one franchise in the future.
“You have to take more than just a step back,” says David Omholt, president of Plano, a Texas-based franchise consulting firm Entrepreneur Authority. “You have to be brutally honest with yourself and introspective about what you’re trying to accomplish by buying this business.”
Determine how much to invest
This narrows down your opportunities to the franchises within your budget. A total investment can cost upward of $200,000. With that in mind, beware of too-good-to-be-true advertisements you’ll often find online, where franchise opportunities start as low as $10,000.
“There’s nothing more expensive than a cheap business,” advises Omholt. “This probably will have a high turnover rate, will be more saturated and competitive, won’t provide a lot of support and training, and won’t be a business you can resell.”
Do what you’re good at — or not
In other words, while taking into account that your skills and talents are certainly important in finding out what franchise is right for you, don’t be afraid to use this as a chance to reinvent the wheel.
“You shouldn’t pigeonhole yourself into the industries that were in your corporate universe,” Omholt says. “Franchising allows you to reinvent yourself and go into a completely different industry, and leave the functional expertise to the franchisor.” Decide whether you want to do what you’re comfortable doing or you want to go into a completely new field.
Get a sense of your risk
A mainstream franchise might actually lower your potential of high returns since there’s so much competition. Experts say that new, more novel businesses might pose a high risk, but they can give you the return you’re looking for.
“There are some great, well-established companies with long track records of franchising success, but they aren’t exactly on the cutting edge anymore,” says Mark Siebert, CEO of the iFranchise franchise consulting group based in Homewood, Illinois. “The newer, cutting-edge companies are riskier, but they can potentially offer higher returns.”
Establish timing
Determining whether you have years to invest into this franchise or you plan to only be in it for the short haul helps in discovering what franchise you should go with.
“Be honest about how long your runway is,” Omholt says. “Is this something you want to do for five years and then flip? Or is this something you intend to pass down to an heir?” Different franchisors come with different restrictions, so some businesses won’t be scalable right off the bat after you decide on your timing.
Still not sure what kind of franchise is right for you and what you can afford? Contact us today for help.
