Buying a franchise seems a simple, attractive way to run your own business: there’s a brand to harness to your business, an operations manual to follow, training to get you set up and an experienced team to help out with ongoing issues.
But running a franchise business isn’t always that simple, and in the world of franchising, the business (and the brand) is never solely yours.
Once you are operating your franchise business, it’s too late for change: you’ve committed your finances, your mortgage and have signed a contract. It’s important to thoroughly do your research on the health of the business, its vision moving forward into the future and its relevance to your expertise.
In other words, don’t fall prey to surface-scratching a brand’s success. You must look deep beyond face value and drill down to exactly what you want out of your next business venture.
Remember, if you choose the right franchise you set yourself up for success.
Here are seven franchising insights and pointers:
1. Consider your options carefully
Potential entrepreneurs are eager to get in on a trendy new business, but that might not always be the best, most viable option. The benefit of buying a franchise is that you’re joining a proven business, not one that’s still finding its feet. If an entrepreneurial future is what you’re after, consider your options carefully. Joining a franchise shouldn’t be a rushed decision.
2. Don’t buy a franchise to be your own boss
The franchising model is structured around uniformity, conformity and definitely not freedom. Let’s make that clear. There are varying levels of flexibility across franchise brands, and there may be freedom to manage your hours. But you’re buying into a franchise for a reason – following systems.
It’s similar to joining the army in that you “march with your comrades”, you wear the same attire and your mission is the same (but with nuances). In an article with Forbes, publisher of unhappyfranchisee.com Sean Kelly said the following: “Buying a franchise in order to control your own destiny is akin to joining the marines in order to ‘do your own thing’.”
3. Franchises fail too
It is commonly understood that franchises have a lower fail rate than regular small businesses. The reality is that they generally face the same struggles. It’s not in the model you choose that will determine your success, instead, it’s the particular franchise you choose that will make the difference, says Kelly. “Some franchise chains have failure rates as high as 80 to 90 percent, while others have almost no failures.
“Don’t be seduced by vague statistics or common wisdom; do careful research on the specific franchise you are considering to determine how many franchise owners are still in business through the full terms of their franchise agreements.” It’s also worth noting that getting to know your potential franchisor – their personality, goals, etc – before taking further steps is crucial, too.
4. Don’t be tempted by PR
If you register interest with a franchise business and you’ve noticed they fancy showing off their press clippings, accolades and awards don’t assume that success is a sure thing. Usually it means that they are very good at executing an aggressive PR push. Don’t be fooled – companies are great at marketing their success – so do your own sifting.
5. Seek out franchise complaints
Before you ink a legally binding contract with a franchise business it will serve you well to know what their critics are saying. There won’t be a business in the world that has 100 percent positive feedback, but there might be something that’s recurring in a particular business that you don’t want to be part of. Another solid way to get feedback? Talk to current franchisees.
6. Hire a franchise lawyer
This is one of the most vitally important steps in the potential franchisee’s journey: you MUST consult with a seasoned franchising lawyer who can help you with the nitty gritty of the contractual details. There might be subtle points that you don’t understand that a legal mind versed in franchising can pick up.
After this process, you might find that the contract you were about to sign would have made the next five to 10 years of your life a nightmare. In this instance, ignorance is not bliss. It is a recipe for disaster.
7. Imagine failing because it’s normal
Encountering road bumps and feeling like you’re hurtling down the motorway in the dark: these are all common to the business journey. It takes confidence and enthusiasm to start your business, even if you’re joining an established franchise. So it’s entirely normal to feel a struggle – just make sure you’re truly cut out for the adventure.