As of July 2018, there are 4,000 different franchise systems or franchisors in the United States, according to Forbes. And while some are well-established, many are lesser known because of technological changes and newer industries. That’s why picking the franchise that suits your interest and experience level is essential. But before you make your final decision in choosing a franchise, here are some important factors to remember.
Demand is Essential
It’s better to choose a franchise that’s in the growth stage as opposed to one that’s in declension. That way you know the demand for your product or service is strong. Start by studying secondary research information on your industry. If you plan to run a restaurant, for example, the National Restaurant Association (NRA) is the place to start. It provides statistics on various restaurant segments, including casual dining and fast food. You may also discover some specialty segment like a certain ethnic food is growing faster than the one you had an interest in.
Always Research Your Franchisor
Ascertain how long your franchisor has been in business and how financially sound it is. You’ll also want to purchase one that’s operated with the highest level of ethics. Select a franchisor that best suits your needs. If you need help in not only selecting a location but building the unit, find a franchisor who offers that assistance. You will also need a franchisor that offers training, marketing and operational support. One of the most important steps before selecting a franchise is to talk to other franchisees in the system, according to Entrepreneur. Get their opinions about the franchisor and ask how their experiences have been with the company.
Long Hours Are A Given
The hours that you’ll spend at your franchise unit may far exceed the hours you’re putting in at your job. Expect to work 12, 14 or even 16 hours per day as you’ll need to monitor your business over the course of a day. This is especially important if you have managers and employees working for you. You’ll need to learn all aspects of your operation in case someone gets sick or quits.
Expenses Will Exceed Expectations
With most franchisees, you’ll have an initial investment as well as a licensing fee. You’ll also be paying for rent, inventory, equipment advertising and the cost of the grand opening, according to the Washington State Department of Financial Institutions. Other expenses include salaries, repairs, insurance, legal and accounting fees. In addition, if your franchise is your sole source of income, you’ll need to have enough money to operate the business until you get beyond the break-even point.
Do your due diligence before purchasing a franchise. That way you won’t be blind-sided with anything that derails your dream of operating a successful franchise.