Starting a franchise can be a great way to enter the exciting world of business ownership. There are many benefits, but like anything there are also drawbacks. While purchasing a franchise gives you the opportunity to buy into a proven business model that comes with a built in support and supply network, it can also be quite costly. Not only are you required to pay the franchise fee, service fees, advertising fees, and all the other standard operating costs, in most situations you are required to have a certain net worth and available liquidity.Even if the franchise is a national chain that everyone knows, like McDonald’s, it may not be the right choice for you. Sure the name alone will bring in customers, but the price tag of owning such a franchise is quite hefty, costing between $950,000 to $2.5 million. That alone should make most people a little apprehensive, but it also comes with some questions for you. Is this the type of franchise you want to own? Can you envision yourself owning and running a fast food restaurant, day in and day out? The potential for profit is huge, but so is the cost and level of commitment it takes to own and run one.
Have you ever heard the saying, “learn to walk before your run?” That expression definitely holds true in this type of situation. If you are new to owning a small business or franchise, then it is highly advisable to start small by getting some practical experience. Sometimes baby steps are a better way to get where you want to go, and sometimes that may take a few years of actually managing an operation to understand the day-to-day operations of a franchise. Which poses the next important question...where do you ultimately want this investment and business venture to take you?
If you have big dreams for the future, that is a great start. Ambition and a strong work ethic are critical for success in any business scenario, but even more so when you are a franchise owner. That’s why it is so important to ask all the right questions of yourself and others before diving in. You may want to contact a few franchise owners in your area to learn more about their experience. Without being too intrusive, let them know that you are considering purchasing a franchise and would like to know if their experience as an owner was everything they expected. Are they happy with their success, disappointed in the reality or surprised at their return on their investment? You’ll find that most franchise owners will be more than happy to take a few moments out of their busy day to talk with you. They may even be interested in mentoring you or even investing in your franchise, so don’t be afraid to reach out.
After you have gotten some solid answers to the questions you have, take some time to really take a close look at your finances. Do you have the liquid assets you need to even get your foot in the door? Are you ready to commit 100% of your life to making your franchise a lasting success? Is the projected ROI worth the investment of time and resources? You may want to consider a small franchise where the overhead and stakes aren’t quite as high. Remember, this is a business venture that requires you to go all in with your time, money and energy to succeed. If you don’t have that level of commitment, this adventure in franchise ownership may be over before it even begins. Make the smartest decision for you. If you need some help getting the capital to get started, find out how business funding could work for you today.