Factors to Consider before investing in a Franchise

There are a lot of factors to consider when you are going to start investing in a franchise business – any kind of new business represents a considerable investment not only in monetary terms but in the amount of time and effort that you are going to have to put into it. For the first few months, it might seem as though every moment of your life has to revolve around your business. In the end, the rewards from owning your own business are substantial, however, as people who own their own businesses can end up making about ten times as much as people who work for someone else. Still, there are reasons that you may want to not start a business up now, but hold off until the state of your life is more conducive to the demands of starting a franchise. Here are some of the things that you should think about when you are planning to begin running your own franchise!

The First Issue

The first issue that must be considered when you want to own your own franchise is the cost – there are all kinds of different price levels for franchise businesses. Depending on the franchise you may be required to pay anywhere from a couple hundred or thousand pounds to upwards of one hundred thousand pounds or more. For a typical large scale franchise such as a restaurant in a chain or something similar, you should be prepared to spend around one hundred thousand pounds or more in total – the first cost that you think about is the franchise fee, but this is only one of the costs that come into play. Whatever you have to spend on the location of the business in terms of a lease or rent is going to have a big impact and represent one of your primary unavoidable costs.

Other costs that come up during the operation of a franchise business will be your inventory, the cost of hiring your staff (and generally keeping slightly more staff than you need at any one time so that when the inevitable time comes that people quit without giving much advance notice you are not caught shorthanded), general upkeep and repairs that you have to make on the location that you lease (along with whatever kind of aesthetic and structural changes you may have to make in order to make your store look the way that a store of the franchise you have chosen should look), the cost of marketing your franchise business in the community, and so on. You will always find, especially if this is your first time, that there are lots of costs that you have not yet considered which will come up over the first couple months – so make sure before you begin that you have plenty of money for unforeseen circumstances.

If you know for sure that you have enough money to handle starting a new franchise business, then you should think about whether or not you have the time to put into the business in question. No matter what kind of business you choose to begin, you will find that there are lots of problems that you will have to take care of, and you will be the one responsible for determining whether your business succeeds or fails so you will have to be on-call twenty four hours a day and seven days a week if there is anything which has to be done to keep things running. If you already have a lot of responsibilities in your life, such as kids that need a lot of attention, then this may not be the best time to start a new business – wait until you have the ability to devote at least as much time to your business as you would if you had a regular forty hour a week job and then some!

You may also find that having your own business cuts into your time to the point that it may affect your personal life. If you are constantly stressed by the requirements of those all important first few months – the time period where you are getting the business on its legs (on a profit making basis for the first time) then this could make it harder for you to relax when you are with your family and friends. The way that you manage your stress will have a big impact on whether or not you are able to succeed in general, as well as whether or not you will be able to successfully integrate the running of a business with a life which is full in all other ways. If you are good at compartmentalising – taking care of business when you need to and relaxing whenever you are able to find a moment off – then you may find that you have what it takes to handle a demanding franchise business start-up.

These are some of the personal factors that are worth thinking over when you want to see if it is the right time in your life to start a franchise business. However, there are other external factors that you may want to consider as well. The overall state of the local economy and whether or not the area that you are planning to start the business in can sustain that kind of franchise business is something that you need to research as part of your business plan. This is just one part of the due diligence research that you must undergo when you are putting together the plan that you will present to the bank to obtain a business loan – you have to be able to demonstrate that you have put in enough time and effort in the planning stage of starting a business and that there is a fair chance that the business will be a success based on the environment in which it will be built.

Also, think about the specific franchise that you are interested in and whether or not it is well managed, as well as whether or not it is currently on the grow, shrinking, or staying fairly steady. Just from what you know as a customer you may be tempted to think that a certain franchise chain is doing well when it is actually not very well managed and losing stores – you can find out about the status of a franchise by going through a research phase where you collect information from the franchise company as well as from its competitors – get the materials that the franchise company sends out to prospective investors and store managers and review the reputation that the franchise has among managers who post on franchise forums on the world wide web.

The first franchise that you consider investing in may not be the right one, but don’t lose heart! Go to franchise fairs, where you can learn about the other franchise business opportunities which are offered by companies big and small. Just walking around a franchise fair you should be able to start getting ideas as to what kind of businesses you can run successfully and which ones would be best suited to use in your town. You may find that the right franchise for you is a smaller and less expensive one which nonetheless provides a service for a need which has not been filled by any other franchise chains in your area. If you are able to select a franchise which will be unique and distinguished in its locality then you will be able to build a reputation that much easier and have a significant advantage in making the franchise a financial success.

For the right person at the right time and in the right place, a franchise business can be a big success. Remember that all of these things have to be right if you want to have a business which runs smoothly and does not interfere with your life. Once you decide to go ahead with the franchise building process, have a flexible attitude towards any problems that may arise and be willing to try out new solutions, yet never forget that the franchise company that you work for has the experience and materials to help you be successful – remember that they have a lot more experience getting stores off the ground, and because they will be receiving a certain percentage of the profits from your business they want you to be successful and will give you some of the best advice that you can get all included in your franchise payments.

Hope for the best but prepare for the worst, and be aware enough of the issues that go into building a new franchise location that you do not make your move until you know that it is the right thing to do. Good luck finding the right franchise for the place where you live and turning it into a success that adds to your life in the right ways and makes your life ever richer and happier as a result!