Purchasing a franchise business can be exciting and daunting at the same time, you need to take the time to carefully scrutinize all of the factors that come into play when making such an important decision.
We’ve compiled a list of five key factors you should always take into consideration before signing on with any franchise:
1. Passion is Mandatory for Franchise Success
The very best franchisees love what they do. In fact, passion is the most important trait you need to become a successful franchisee.
Why? Because unlike account keeping, marketing, managing staff and other key business skills, passion is a trait that cannot be learned.
There are two types of passion that all successful franchisees have: a passion for their franchise and passion for the life goals that this franchise helps them accomplish.
Passion for a franchise comes from choosing a franchise that matches your skills and interests with a product you believe in. When you combine working every day at something you love and understand with a product you enjoy and are confident representing, your enthusiasm will quickly spread.
In action, this type of passion makes you approachable and encouraging, and your customers more satisfied with their experience.
However, any successful franchisee will tell you that the early days of establishing your franchise will be challenging. Rising to these challenges requires the second type of passion coming into play. By remembering that your franchise is a tool for achieving the greater life goals you desire – be they having more free time, increasing your income, or creating a way to help other people succeed in life – you can motivate yourself to keep going through difficult periods.
Keeping in mind the way your franchise helps you succeed in areas of life that aren’t strictly business related will sustain your enthusiasm and resilience when you meet the inevitable challenges of working for yourself.
In the words of Carlos Castaneda, “We either make ourselves miserable, or we make ourselves strong. The amount of work is the same.”
2. Focus on Profit
Don’t focus on the cost of purchasing a business, focus on the returns.
Ultimately, it doesn’t matter what a business costs you if the return on the investment is excellent. If it cost you a million dollars to purchase a business that you knew would make you a million dollars a year, there would be no question as to whether you’d buy it.
“The wealthy aren’t interested in the means, only the end,” says Steve Siebold, author of ‘How Rich People Think.’
The key to financial success isn’t getting formal education, making small investments here and there, or working every hour of every day. Franchisees make money by spending the money needed to acquire the specific knowledge and tools they need to amass wealth.
A good franchisor will impart you with both of these, no matter the type of industry you decide to invest in.
Once you’ve got the information, skills and equipment under your belt, the profit you’ll make will soon surpass the cost of buying the business.
3. Due Diligence is Key
Every company that sells franchises will tell you their business model is the surest way to success. No matter how good a company states their franchise is, a good way of testing whether that’s accurate is to see how their current franchises are performing.
Chances are if there are a multitude of franchisees looking to jump ship and sell their business on, all is not well for the larger company.
Before you commit to investing in any franchise, take the time to see how many current franchisees’ have their business listed somewhere for sale.
If current franchisees are doing well they won’t have their business for sale and you can look forward to joining a business community that is on to a winning formula.
4. Who’s Doing the Marketing?
Marketing your product is what makes you money. If you’re new to running a franchise, do you have a franchisor that understands marketing and is getting business for you?
The answer should be yes.
From formulating strategies through to implementation and refining techniques, effective marketing requires a variety of skills.
According to marketing agency The Creative Producers Group, “Many franchisees don’t understand the complexities of creating and growing brand awareness because they’ve never been exposed to the role of brand management.”
A good franchisor will have an effective system in place to operate traditional and online marketing campaigns, arrange pricing tiers, manage territories, utilize planning tools and formulate reports.
A great franchisor will test all of these marketing techniques, then teach the most effective strategies to their franchisees.
Why? Because franchise marketing is important not just for your sales figures and customer satisfaction, but also for the development of the franchise brand as a whole.
5. Look for Good Training and Support
If you’re still unsure about whether or not to get on board with a franchise company, take a look at the level of training the franchisor has on offer.
The amount of training your franchisor provides will give you an insight into both how much effort your franchisor is willing to put into your success and what your chances of business success are.
High-quality training comes from a franchisor examining and documenting all of the systems that made their original business successful in the first place.
“It’s critical that the franchisor keep in mind that they’re not selling just a product or service — they are selling their system for success,” says Jason Helfrich, CEO and co-founder of 100% Inc. – a company overseeing 19 chiropractic clinics in six different states.
The more complex the business, the longer the training and ongoing support needs to be, not hours or days but weeks and months until your franchise can stand on its own.