Franchising is a great way to get into the business world. It combines the freedom of owning your own business with the safety net that comes with working with a larger brand. If you want to own a franchise, there are certain questions you need to ask yourself. Below are four of the most common ways to choose a franchise that is perfect for you.
What Do You Want?
Getting to know yourself is the first step towards franchise ownership, according to Inc.com. It’s important to know what you want out of a franchise opportunity before you make a commitment. Even if there’s a so-called “perfect” business opportunity waiting for you, it might be smart to avoid it when your heart simply isn’t in the core business. You need to set goals for yourself and figure out what you really want out of a business before you start.
What’s the Field Look Like?
The Wall Street Journal points out that you have to take a long look at your competition before investing in a franchise. While you might want to go after an unfulfilled niche, a total lack of competition might indicate that others have tried and failed because of a lack of demand. On the other hand, too many competitors will make it too hard for you to stand out and might cause your business to fail before you start. You want to strike a happy medium – competition is good, but not so much of it that you can’t bring in consumers who have unfulfilled needs.
What Will You Spend?
It’s never pleasant to talk about money, but it’s a realistic part of the investment process. You have a limited amount of money to spend or borrow, and franchise fees can eat a substantial portion of what you have. Take a look at what the initial cost of investment is, as well as the franchise fees required. Look at hidden fees as well, such as the cost of using company-improved paper goods or other branding. If you find the fees will eat too much of your potential profit, it’s time to look elsewhere.
How Will You Get Out?
Finally, think about your exit strategy. Are you looking for a short-term investment that will allow you to cash out? Do you need to make money within a specified time period before moving on? If so, you need to know the ease of selling your franchise or closing it down. If you can’t move on easily, you may want to avoid a business that might otherwise seem like a good opportunity. It’s better to avoid profits than to be caught in a losing situation.