The best time to buy a franchise may just be right now. According to a Franchise Resales report, the current demographic and financial ecosystem is ripe for buying franchises. There is greater access to capital for starting your business than ever before and many baby boomer franchisees are now retiring and their franchises are up for grabs.
Franchises as a concept have become huge all across the world from Dominos pizza and McDonald’s to Subway and Supercuts. A franchisee invests money to set up an outlet or franchise. The franchisee then pays a royalty fee to the corporation and keeps the remaining profits for herself. A franchise is a great way to take advantage of a business model that has proven successful and creating a business that is still your own.
Although a franchise does have the advantage of an established business model and operating standards, setting up a franchise is no walk in the park and comes with its own downside. Here’s what you need to consider to find out if buying a franchise is the right decision.
It’s like any other business; so you need to be mentally prepared for it
Although a franchise has the advantage of an established business model, it still means setting up a business. This means making sure you have enough capital to make the initial investment to set it up or to make a purchase if you are planning to buy an existing franchise.
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You also need to make sure you have enough savings and resources to be comfortable with not having any income for at least a year as most franchises will need this time to break even. It’s also important to make sure you have the support of your spouse or family and close friends so that you don’t undertake such a risky journey alone.
You have less freedom as a business owner
If you decide to buy a franchise, you will have to follow all the operating, product and marketing guidelines that come from the corporation. If you’re the kind of person who thrives on having a lot of flexibility and freedom then buying a franchise may not necessarily be the best way to become a business owner.
Do you have the right franchise in mind?
While a franchise system means you have access to business support and a brand reputation, not every successful franchise will be the right choice for you. The success of your franchise will depend on how suitable the franchise is for your geography and demographic, how passionately you feel about it and how good you will be at marketing it locally. These factors are very important when it comes to deciding which franchise you want to buy. You also need to make sure that the franchise has a robust training system and that all the legal documents are in order before you cross the t’s and dot the I’s.
At the end of the day, a franchise is a great way to limit the potential downside of entrepreneurship, especially if it’s your first venture. At the same time, it’s important to make sure that being a franchise owner is suited to your temperament. If so, you should buy the right franchise that complements your skills and business acumen.