5 Steps for Choosing the Best Franchise

The following is a contributed post from Jenna, a freelance blogger who is mainly focused on business innovation.

Many people stick to their corporate jobs, believing that entrepreneurship is only for the few, the lucky, and the brave. Although they’re miserable, often working too many hours, putting up with bad bosses, irrational corporate policies, and not earning enough, they don’t see a way out.

However, there is a way to ease into entrepreneurship – buying a franchise. A good franchise will provide you with everything you need to start and run a successful business – the products, services, branding, training, support, and resources.

Franchise vs. Independent Business

Is a franchise better than building your own business? If you have a burning desire to build a specific type of business, then the answer is “no.” If you aren’t focused on a particular type of business but just want to be in business and are fine with following a proven business process, then the answer is “yes.”

If, for instance, you want to build a retail business, your chances of success will be higher with a franchise because you will be following an established business blueprint.

Let’s suppose you did some market research and discovered that postal, delivery, and shipping businesses were highly profitable. Should you build your own store or buy a UPS franchise? If you look at the numbers, you will realize that the cost of a UPS franchise is far less than the cost of building a comparable store of your own. In addition, the franchise will train you in every aspect of the business, while if you did it alone, it would take years longer to learn everything you needed to know to run a successful store.

How to Buy a Franchise

When you buy a franchise, you are not merely buying an established business. Franchising is far more complicated than simply following practical instructions.

When you buy a franchise, you are building a partnership. Since you and the franchisor are both making an investment, you have to make sure your interests, goals, and values are all aligned.

Here is a list of 5 things you need to consider as a franchisee to build a mutually successful relationship:

  1. Your natural interests.

You need to carefully select a business that you have a natural interest and aptitude for. If, for instance, you only have a vague interest in food preparation, then you will find it exasperating to run a fast food franchise. If, on the other hand, you love to clean and organize things and your house always looks as if the maid just left, then a steam cleaning carpet franchise would work perfectly for you.

  1. Be comfortable with finance.

You need to understand financing to finance your small business franchise and to run the business once you buy it. The more you know, the greater your chances of running a successful business. However, it doesn’t mean that you can’t run your business if your knowledge of finances is weak. What really matters is your willingness to work with a financial expert to guide you and your willingness to learn as much as you can about financial management as you grow your business.

The franchise will have a disclosure document. Read through it carefully so that you don’t underestimate the financial picture. This is not a one-time investment, but an ongoing investment. The partnership requires you to contribute time and money for the business to be a success.

  1. Manage business operations.

You need to be willing to manage all aspects of a business, from hiring to firing, from ordering supplies to waiting on customers, from doing inventory to troubleshooting customer service problems. While the franchise will offer training on operations, you should also be open to continuously learning on the job.

  1. Don’t take shortcuts when researching.

You need to avoid the temptation to shortcut your research. If you don’t do a thorough job, you’ll make expensive mistakes: You will fail to pick an established company, fail to grasp the terms and conditions for secure borrowing, and fail to recognize experienced franchise management.

Here are some essential things to research:

  • The history and corporate culture of the franchise.
  • The market for the franchise’s products and services.
  • Where the industry the franchise serves will be in the next ten years.
  1. Identify with the franchise’s vision

If you’re just in it for the money and don’t identify with the company’s mission statement, then you will have problems in the future. Conversely, if you identify with the company’s core values, then you will be more than willing to roll up your sleeves, immerse yourself in learning how the business works, and execute on all the decisions you will have to make on a daily basis.

You also have to understand that you can’t expect to do business your own way even if you believe you have a knack for improving business processes. The franchisor has already figured out what works and what doesn’t work, and you will have a much higher chance of creating a successful business if you are willing to work with the franchisor’s business system.

The Challenges of Entrepreneurship

Entrepreneurship isn’t easy. It’s much more than launching a business around a brilliant idea. You have to learn an intimidating amount of technology, comply with numerous government regulations, and learn all about how to run a business from scratch. Buying a franchise will help you learn how to manage every aspect of a business.

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.

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