Most people interested in owning a franchise start their research with a Google search for info on specific concepts. Since food and coffee are part of our everyday lives, when we think “franchise”, we generally think franchising is simply McDonalds, Subway, Dunkin Donuts, etc. While these are all successful businesses, there are other options out there that may and likely are more suitable depending on your personal interests. While statistics may vary, it’s estimated there are over 3,500 different franchise businesses available in the United States today. Almost every industry has a franchise model seeking qualified and motivated franchisees to invest in their system. If you’re serious about franchising, you don’t want to limit your options. Instead of starting with research on specific concepts, start by answering these three questions…
How much income do I need to support my lifestyle?
Think of it this way, if you were looking for a new job, what would salary requirement be? This is the best way to approach your franchise research. Certain concepts will generate different income levels and you’ll want to make sure a particular franchise will at least have the ability to generate the income you need.
What is a suitable investment level?
There’s no sense researching concepts until you know what you can afford. If you’ve ever purchased a home, chances are your first step was to get pre-approval for a loan, then target houses or condos within that price range. Before researching specific concepts, lay out your financials and determine an investment level you are comfortable with. If you are uncertain and need assistance, it’s recommended to seek advice from your Financial Planner and CPA.
When do I want to open my business?
I generally advise clients to start the formal due diligence process if they want to open within six months or less. It typically takes between 30 and 60 days of due diligence to determine if a particular franchise concept is right for you. Depending on the type of business (retail, food, etc.) it may take some time to find a location and build out the space. If your time frame is a little longer, it’s best to wait before formally engaging talks with a franchise.
Organization Can Prevent Costly Mistakes
Owning a franchise can be a fun and exciting experience. It’s normal to want to seek new information. If you’re curious, by all means start looking at different concepts to get a feel for what’s out there. Focus on industries of interest as there are a lot of interesting opportunities. I would shy away from specific details until you’ve addressed the above questions. This will save time, frustration and help target specific franchises to help achieve the ideal lifestyle. A targeted approach can help achieve your goals and reduce the probability of a costly mistake.