During the past several decades, franchising has become not only a uniquely American institution, but also one of the leading doorways into small business ownership. Every year, thousands of individuals choose to get into business ownership via the franchise route. But not everyone is suited to successfully operate a franchise.
To make the right choice for your own situation requires careful thought about your own goals, skills and personality. That thinking should be done before searching for and evaluating franchises.
If your appetite for risk is low, a franchise may be your best choice. A franchise lowers the risk because someone else has already pioneered the concept, tested the ideas and found what works and what doesn't. If you want to do all of those things with your own idea, start a business yourself.
Successful franchisees don't like to reinvent the wheel. They like to work within the proven systems and established procedures of the franchiser. They constantly ask advice of the franchiser's support staff and other successful franchisees and follow the advice they get. They understand that they don't know all the answers and are willing to ask for help when they need it. This attitude enables them to achieve success more quickly.
A good franchiser will be able to provide the training and support services needed to position the franchisee for success. Franchisees give up some independence and lose some control in exchange for the advantages the franchise offers. There are costs for the benefits a franchise can bring: the initial fees for the franchise and the monthly fees, which are typically a percentage of gross revenue. The franchiser will specify how certain things must be done. Territorial boundaries may be specified as part of the franchise agreement.
People and team-building skills are usually required of franchisees, as are the abilities to plan, organize, administer and direct the work activities of employees. These skills are used to create loyalty, value and trust, and are probably the most important characteristics of all.
Those who have a firm sense of what they want to achieve, and the drive and ability to execute a proven business model, are far more likely to be successful. They will do whatever it takes to get the job done. This attitude shows in every action, such as putting in long hours and handling multiple tasks. No matter what franchise you're interested in, you can be sure it's going to take a strong commitment and many hours of work to make the business a success.
After you can honestly say that you have these characteristics, begin your franchise search. Here in the Treasure Valley, SCORE refers its clients to two franchise service providers who will provide a no-cost assessment to assist in assessing your capabilities, interests and financial requirements as part of an evaluation process. These services are FranChoice (FranChoice.com) and FranNet (frannet.com).
A key to choosing a successful franchise is reading the Franchise Disclosure Document for that franchise. Since the mid-1990s, these documents have been required to disclose financial, industry and market risks to prospective investors, much as a stock offering requires the issuance of a stock prospectus.
Regardless of the materials provided by a franchiser, it is best that you prepare a business plan. That plan should address two critical areas: competition and a marketing plan. It is your investment that will be at risk, and within each franchise network there have been franchises that have failed. Contact two or more of any franchise locations that have terminated their business.
Several Treasure Valley SCORE volunteers have owned successful franchises. They are available to share their experiences. Call SCORE at 334-1696 for an appointment.