Franchising has been a proven entrepreneurial opportunity for decades now. It provides the stability and support of a large corporation with the local autonomy of a sole proprietorship. Countless business operators have become very successful by utilizing franchises wisely. And with the right skills, work ethic, and determination, you can do the same thing.
The main question you may have to answer is just what franchise to open. Thanks to the success of the overall business model of franchising, there are more choices for would-be entrepreneurs today than ever before. It has gone beyond restaurants to include cleaning services, home care companies, and much more.
A careful examination of the available opportunities is needed to determine which ones are the best franchises to own. Your review needs to be structured in such a way to reflect several key factors.
Startup Commitment
This is a balancing act. The less they expect from you, the less you’ll get from them. If franchise fees are too low, you can probably expect to receive less help from the corporation. But if they’re too high, you can struggle to make it through the first months of operation.
Look at the franchise fees and what they get for you. Do they carry a comparable commitment from the company? Or does it just look like they want to cash in on you quickly and let the company sink? Work with experienced franchisees or business attorneys to see if the franchise contract is fair, and to review items that might be negotiable.
Staying Power
Fads are a great thing. There have been many people who have done quite well by franchising trendy items. But the most successful ones have done so by capturing the market explosion and then exiting quickly before the trend disappears.
While that can and has worked, it may not be the strategy you want. Most people look at franchising as a lifelong plan for income, not as a short-term investment. The main exception is serial entrepreneurs, who have no intention of staying more than a few years.
As you look at a franchise opportunity, make sure it’s for a good or service that won’t be going out of style soon, or at least, one that will give adequate warning signs. A photography shop owner that didn’t see digital approaching didn’t have to go belly-up, but many did.
Brand Recognition
There are certain names that need no introduction to consumers. You simply advertise in the local market that you are now a franchisee and the customers immediately know who you are and what you are about.
While it can be very lucrative to get in on the ground level with certain franchises, it is a very different course for success than established ones. You’ll have to live through the company’s growing pains as they fight for market share, and you’ll have to be extra-strong financially in order to survive that introductory period. On the positive side, you may not have to put up as much money as later franchisees, and you could even grow into a permanent role at the corporate level.
An easy eyeball test for this is simply to tell friends you’re thinking of opening a franchise of Company X. If a decent number of them recognize the name, that’s a good indicator of potential success. If you have to explain who it is, there could be problems.
Franchising is a great way to earn a living. It can be very profitable because of its established products, brands, and support. With a crowded field of suitors out there vying for your investment dollar, it’s essential that you use a critical eye to evaluate all the possible options before writing that check.
