Although a franchise includes a packaged operating system, branding, training and manuals, as franchisee you’ll be responsible for the day to day operation of the business. Investing in a franchise is far different than being a company employee; you are in a different position and can’t leave if you don’t like the job, your boss or the corporate culture. If you’re considering investing in a franchise, you’ll increase your opportunity for success if you can identify franchises that match your individual profile. This profile should include your financial resources, business experience and skills. On the other hand, investing in a franchise that is a mismatch can result in failure and a loss of your investment. Before you begin your franchise search, do a personal inventory so that you can construct what I would refer to as your franchise profile. By starting out with your franchise profile, you’ll be in a better position to apply your strengths to specific franchise opportunities.
The Components of Your Profile
These are the areas and questions you want to focus on when constructing your profile. Be objective and don’t be reluctant to enlist input from family, trusted friends and advisors. You should develop a summary or list for each category. You can then use this information to develop your franchise profile.
- Financial Resources– Identify how much capital you have available to invest in a franchise. Since most new businesses, including franchises, do not reach break even for approximately one year after startup; be sure you have access to additional capital to provide for unexpected circumstances, such as a slow launch.
- Business Experience- List your business skills. Do you have sales experience, have you managed people or do you have financial experience? What kinds of businesses have you worked in? What did you like about specific jobs you may have had? Consider how your business experience could be strength for particular types of franchises.
- Skills- Do you, your partner or spouse have experience working in or operating a business comparable to a franchise you may be considering? Do you have specific skills such as teaching, accounting, a trade or other skills?
- Personal Factors- What type of work do you enjoy doing? Are you a people person or the type that would prefer to work on your own? If you prefer a franchise that requires the franchisee to generate sales customers rather than operating from a bricks and mortar location, you’ll need to have good selling skills.
- Family Considerations- Do you have a family? Children? Would you be in a position to work the long hours that most franchises require? Will your spouse be involved in the franchise? Can you survive the loss of your franchise investment? Operating a franchise is no different than operating most small businesses, it requires long hours and dedication.
- Preferred Franchise- Identify the type of franchise you’d like to operate. There are numerous categories of franchises ranging from food to children’s services. For some ideas, you can buy a franchise directory or surf the Internet to view various franchise opportunities. Of course you know what you can invest so that will allow you to filter your search based upon the required investment.
After you’ve compiled the information needed to construct your franchise profile you‘ll be able to summarize it. Now you’ll be able to narrow your choice of franchises down to those that most closely match your franchise profile. You should aim for three franchises so that when you start your evaluation, you’ll be able to compare one franchise to the others.
Only the Beginning
This is the first step in the franchising process since you’ll need to carefully evaluate each franchise to determine which one is the best choice for you. There is a good deal of information available on the Internet that can provide information and advice for evaluating franchises. After you’ve started your evaluation be sure to speak with existing franchisees since they can be your most credible source of feedback when it comes to the performance of the franchisor. When you narrow your choice down to a specific franchise you should engage the services of a franchise attorney to review the franchise agreement. In some cases, an accountant may be used to analyze the franchisor’s financial statements and assist you in doing a proforma income and cash flow statement. Remember, the franchise process begins with your individual profile.