One of the ways many people pursue building wealth is to work for themselves instead of someone else. But opening a new business venture does not come without significant hurdles and risks, both professionally and personally.
A franchise differs from a new business startup in many ways, one of which is that franchising can be less risky than beginning anew. When you buy a franchise, it is like someone handing you a playbook, and if you follow it, your chances of success are high.
There are a number of different franchise industries, many of which most don’t even know about. Why is the average person unaware of franchise opportunities? Based on my experience as a franchise consultant, upward of 85% of those who invest in franchises wind up in an industry in which they didn’t even know a franchise existed. After all, you don’t know what you don’t know.
The problem is that if you don’t know what options are out there, you might not be able to realize your dream as a franchise owner in an industry you are passionate about. When picking a franchise to invest in, the No. 1 priority to bear in mind is you.
Below are five steps you need to follow if you’re thinking of pursuing franchising:
The best way to ensure success in franchising is by first exploring what makes you tick. Not every franchise is suited for every personality, so it’s critical to discover what you want from your new path. Consider things like your values. What qualities and characteristics do you possess that would compliment a franchise? What strengths, weaknesses and skill sets translate well to the industry and the franchise brand you’re considering?
Franchise ownership will occupy not only your financial resources but also your personal and family time. Once you sign on the dotted line, it is often irreversible. Therefore, the most critical step for franchise ownership is taking the time to understand the implications of owning a franchise.
It also means taking an honest look at all variables, especially those you are not familiar with. Consider what type of business model it is. Is it a business-to-consumer or business-to-business operation? Will you need a brick-and-mortar outlet, which comes with additional expenses such as real estate and construction costs? When you start to look, it can become overwhelming, so you want to ensure you’re prepared.
Once you have a clear sense of the qualities and characteristics of owning a specific franchise, it is time to get real. The only way to know about a business and how it operates is by immersing yourself in it. Visit the franchises you’re considering to compare and contrast and help decide which one suits you best according to your likes and dislikes.
Once you have decided on the franchise you’re interested in, it is time to speak with individual owners who took a leap of faith and achieved the success you desire. Numbers typically look good on paper, but talking firsthand with someone “in the trenches” can give you a more realistic timeline, list of expectations and responsibilities. They can also outline what you need to do to achieve the success you desire.
Next, you should have a “Discovery Day,” which is when you meet the team running the franchise. Meeting this team is one of the most important and memorable days of your life—like meeting your future in-laws. It is a day where the good, the bad and (sometimes) the ugly are uncovered. From that point on, all the skeletons are out of the closet, and preconceived notions are verified or debunked. When the curtain lifts, you will know whether you can work with and trust the people behind the organization, as well as whether you believe in their vision and are willing to stand behind their product or service. Either way, Discovery Day is Answer Day.
The final step might feel uneventful, but it is by far the most crucial step: the contracts. The contract phase is where you commit to the next few years of your life tied to a franchise. It is where you discover your and the franchise’s commitments and obligations. You will likely have a legal review beforehand to ensure both parties fully disclose any important details. You can consider working with an experienced attorney, as I’ve found it helps to have an expert on your side.
If you are ready to begin accumulating wealth through franchising, ensure you keep the steps above in mind. Franchising could be one of the most significant commitments you will ever make, so you need to make sure you are prepared.
FORBES (Seth Ledermann & Forbes Business Council)
