In 2019, there were over 773,000 franchises in the United States. The number is a bit less in the UK, with over 22,000 franchisees owning their own businesses as of 2014. But, no matter where you go in the world, you’re bound to see a restaurant that you recognize.
Franchising can get a bad reputation because people tend to think that one large business is in control of everything. But, that’s just the opposite of what franchising really is. In most cases, people who open franchises across the world are your friends and neighbors. In many ways, franchisees are small business owners, just attaching themselves to a name that already exists.
Franchisees have to learn everything from how to make the experience of eating at their establishment positive and safe for the customer, as well as how to manage the daily operations of a business.
If you’ve been considering becoming a franchisee but you don’t have much experience or you’ve heard negative rumors, it’s important to have the right information.
With that in mind, let’s take a look at six important things you should know before becoming a franchisee, so you can decide if it’s the right move for you.
1. Understand the Cost
Pretty much anyone who goes into franchising knows they’ll have to spend money upfront. The cost of getting started can range anywhere from $10,000 to $5 million, though most franchises end up costing about $50,000-$200,000 for someone to get started.
What is all that money going toward? Your investment should be able to cover:
- Purchasing costs
- Initial inventory
- The amount of capital you’ll need to break even
- The right equipment and services, including a qsr accounting service
One mistake many potential franchisees make is only thinking about their upfront costs. Consider how you’re going to finance the business, and what you can actually afford. If you’re going to open a franchise, you’ll want to do it right. Don’t make the mistake of putting your money into a business that is too small to be a success. Many people are actually able to afford more than they realize, so crunch the numbers or get someone to do it for you.
2. Know Your Strengths and Weaknesses
It helps to be passionate about the business you’re investing in. If you’re franchising a donut shop, you don’t necessarily have to love donuts. But, you might be an expert businessman/woman who can hire people who are passionate about pastries and can sell the products effectively to your customers.
Having the right skills and personality to run a franchise is important. You have to be able to work with people on a daily basis, and you have to be a leader. Remember, once the doors are open, just because there is a recognizable name out front it doesn’t mean you’re still not running a small business. You’re in charge, and it’s important to have the people skills and leadership skills necessary to keep your business above water and turn it into a success.
With that in mind, ask yourself what your strengths really are. Do you have the ability to lead a team? What’s your business background? What are you truly passionate about? If those all line up with where you think you should be before opening your franchise business, you’re more likely to be in good shape as you get started.
3. Understand the Time You’ll Need to Invest
If one of the reasons you’re considering starting a franchise is to leave a job you’re currently unhappy with, hit the pause button. Consider some of the reasons you’re unhappy with your current employment situation. People quit their jobs for a variety of reasons, including:
- Inadequate pay
- Not the right fit for the environment
- No growth opportunities
But, one of the biggest reasons why people often search for a change is due to an overworked schedule. Americans are especially guilty of being overworked, with the average American working 260 more hours each year than workers in Britain.
No matter which country you’re in, though, being overworked can cause burnout and a poor work-life balance.
Being your own boss by opening a franchise might sound tempting if you think you can control your own hours. In a way, you can. But, again, it’s important to remember that you are the owner and that means the businesses rises and falls on your shoulders. There might be days where you’ll end up spending 16 hours at your business, especially if it’s seasonal. Other days, things might be slow and you can take more time for yourself.
So, while you may end up working less on average, allowing you to have more of a home life, be prepared for days when it will be all you can do to make your way home and crawl into bed. Owning a franchise is a huge time commitment, and that’s important to know before you assume that you can just decide to work whenever you want.
4. Research the Franchisor
You might like a particular franchise because of your own experiences there, but that shouldn’t be the foundation on which you become a franchisee. If a popular burger place has good customer service and delicious food, that’s great, but what is the company itself like?
Do as much research as possible on the franchisors you’re interested in, and focus on the business aspect of the company. How long have they been in business? What’s their mission statement? What sort of impact have they made on the world?
Most importantly, try to find out how successful their franchises are across the globe, and how long those franchises typically stay in business. You can also talk to other franchisees in different areas to learn more about the business itself and what you might be able to expect from opening your own place. Having a passion for a place is great, but when you’re trying to make it a viable business, you need to do your research.
5. Don’t Buy the Lie
There is a common misconception that buying into a franchise is a “sure thing,” and that there is less of a chance of failing. In fact, many people who choose to invest in a franchise actually want to own a small business, but feel as though putting their money into a franchise is a safer option, since so many small businesses fail quickly.
Unfortunately, that’s little more than a myth. Don’t assume that attaching yourself to a recognizable name equals automatic success. Think about a popular franchise. Have you been to more than one of their locations? Was each one the same? Were some better than others? Maybe there are even some you’ve vowed to never go back to, but it doesn’t necessarily affect your opinion on the franchisor.
Though people may not think too much about it, it’s easy to see each individual franchisee as their own store/business. If you have a location that doesn’t live up to the standards of your customers, it’s likely to fail. The franchisor itself won’t fail, but your individual business will. You can’t rely on a name to give you success. Instead, treat your store as though it’s your own small business, and take pride in that. Don’t worry about statistics or how quickly businesses fail. Instead, focus on making your store the best it can be, not only as a representation of the bigger brand, but as a representation of who you are.
6. Work For a Franchise
While you can absolutely become a franchisee with little to no experience, you might have a better idea of whether it’s right for you if you actually spend some time in the thick of it.
Try working for a franchise, even if it’s not necessarily the one you’re interested in. You can either apply for a part-time job, or volunteer for a few days if a manager will allow you to do so. Once you see everything that goes into the whole process, from those working the cash register to those making the food, and those “behind the scenes,” you’ll have a better idea of whether you can handle all of it. There’s no better learning tool than experience, so don’t be afraid to get your hands dirty and try to get involved with as many jobs within a particular franchise store as you can.
Not only will it make you more familiar with how the system works, but it can make you more relatable and empathetic to your employees if you do end up starting your business.
As you can see, there is a lot to consider before you decide to invest in a franchise. Finding that balance of doing your research and diving in to gain experience isn’t always easy, but if you’re able to do it right, you can absolutely find success when you invest in the right franchise. Don’t be afraid to trust your instincts, ask questions when you don’t have an answer, and surround yourself with the right tools to build success for many years to come as you focus on your “small business”.
