You’ve heard the commercials on the radio or seen them in magazines. You’re standing in front of your bathroom mirror, staring at your reflection, wondering what to get for dinner this evening, when you hear a voice ask, “Is that all there is?” The jingle continues with the promise of something better- more energy, excitement, and purpose- if only you invest in a franchise.
In some cases, buying a franchise is a sound investment. You can buy into a proven brand from an established company and have the advantage of being a part of a network of businesses that can help you succeed in your new career. But it’s essential to know the right questions to ask before signing on the dotted line. When considering whether or not to invest/buying a franchise, here are four questions you might ask yourself:
1. Am I a good fit?
Even if your friends and family think you’d be great at starting a franchise of the business they’ve seen on TV, it doesn’t mean that you’re ready to take on such a big responsibility. It isn’t easy to manage a franchise because the franchisor has done some legwork to develop a business model and train employees. This means that you’ll likely have to spend more time running your franchise than you might expect.
Because of this, it’s essential to consider whether or not you are ready for the responsibility of owning a business. Some questions to ask yourself include: how much money do I need each month to survive? I have another job lined up for the first few months while developing a customer base and training employees?
2. What are the costs associated with buying/starting a franchise?
Any reputable business that you’re considering buying into will provide you with all the information you need to make an educated decision about whether or not it’s worth it for you to invest in their company. If they don’t, this might be a red flag.
The costs associated with opening and operating your franchise can be substantial. They can include franchise fees, startup costs, and equipment expenses, as well as the cost of employees you will hire to work at your store. Then there are ongoing costs- rent, advertising, legal assistance, and insurance among them- before you even begin to turn a profit.
3. Are there financial red flags with this company?
In some cases, you can uncover potential red flags by looking at the financials of the franchise. This includes its annual revenue, earned profits, and how much money is owed back to the franchisor by franchisees.
If you’re researching a business that’s new or expanding into your area for the first time, it can be challenging to find these details on your own. While there’s no guarantee that a franchise will be successful, it does help to look at the area in which you want to start this business and see how well other franchises nearby are doing.
4. How will my life change if I buy into this business?
Franchises can seem like an easy way to start a profitable business, but there’s a lot of work involved. It takes hard work and dedication to run a franchise successfully, so you need to be prepared for the long haul.
These are just four of the most important questions you should ask yourself before investing in a franchise. Researching more thoroughly can help you decide if it’s the right choice for you.