10 Things To Do Before You Buy a Franchise
by Arnab Dey Business Planning 20 January 2022
A franchise is a system of business where you can buy into an already-existing company and make money off of the name recognition it has built for itself over the years. There are a variety of franchises on the market, such as restaurants, retail stores, painting classes for kids, and even a flooring company for sale are all franchise opportunities.
Buying a franchise is one of the most exciting decisions you can ever make, but it’s also one of the biggest. Of course, franchising has its advantages, but it’s crucial to know what you’re getting into before making any big decisions.
Here are ten things you need to do before buying a franchise:
1. Make Sure You’re Ready to Commit
Before committing any of your resources to a franchise, ensure that you know what you’re getting into and that that’s something you really want to do. It may be easy for your friends and family to convince you to take the risk of buying a franchise, but remember, it is your money you’re putting in and your future. Nobody else can decide whether or not this will be a good investment for you.
2. Study the Industry
If you’re not an industry insider, do your research. Find out how many businesses like yours are currently in operation and where that demand is coming from.
For instance, if you are planning to establish a pharmacy franchise, conducting research on top pharmacy franchises can provide valuable insights into the competitive landscape within the pharmacy industry. You can analyze their market share, geographical presence, customer base, and business models to identify potential opportunities and challenges for your own pharmacy business. Furthermore, studying the success factors and strategies of these top pharmacy franchises can provide valuable insights for your business planning and growth strategies.
As an added tip, when doing your research into the industry, look up any legal cases or new bills to make sure they aren’t going to affect your business in the future.
3. Research Franchise Costs and Fees Before Looking Into Franchises
Before considering buying into a franchise, look carefully at their costs and fees. Some businesses are cheap to get into but will charge you even more in training or set-up fees. Don’t be fooled into thinking that if the initial cost is low, it’s the best deal.
4. Figure Out Who Your Customers Are
As a business owner, you’ll likely need to create a client base before making any money. Figure out who your target customers are before opening up shop. For example, it might not make sense to open an industrial equipment franchise in an exact location that’s crowded with other businesses targeted towards younger people. On the other hand, if there are schools within the vicinity, you could invest in an art franchise.
5. Make Sure You Have Financial Stability
While it’s important not to invest more than you can afford into starting a franchise, it’s equally important to have money saved up for your startup costs. Don’t be fooled into thinking that you can borrow all necessary funds and repay them once the business is up and running. If anything happens and it doesn’t work out, those loans can become a massive burden.
6. Assess Your Skills
Are you a people person? Does the idea of helping others energize you? If so, you may want to work in a service-oriented franchise. On the other hand, if you’re more interested in creating something tangible, an industrial or manufacturing franchise could be right for you. Whatever type of business interests you most, make sure that it’s something that makes sense for your skillset.
7. Talk With Other Franchise Owners
Don’t make decisions based on what you hear in commercials or see in advertisements. Instead, talk with other people who own franchises in similar industries to get their opinions of the company you’re thinking about joining.
8. Beware of Consultants
Most of the time, it’s easy to tell which consultants are legitimate and which ones are not. If you find yourself working with a consultant who makes grand promises about your future business but never seems able to back them up or give you honest advice, chances are they’re just trying to make money off of you without any intention of helping you at all.
9. Research Information About the Franchise You are Considering
It takes a lot of time and research to find the right franchise for you. It is imperative that you do not rush this process, as your decision will affect the rest of your life. When searching for a business, make sure that you look into all aspects – from the positives to the negatives.
10. Make Sure the Franchise Provides Ongoing Education and Training for Business Owners
If the franchise offers no path for its owners to improve their skills, that usually means one thing: you’re on your own. This can be extremely difficult if you don’t have much experience starting a new business. So make sure to research how the franchise supports its existing clients before signing on the dotted line.
Before you invest in a franchise, make sure that you know everything there is to know about it. The more information you have about the company, the better you will determine if it’s right for your needs.