Thinking about buying a franchise but not sure where to start? The first step is to gain an understanding of how the process works. To get started, read the 10 steps outlined in the article. If you prefer personalized assistance to walk through the entire process in depth, we have franchise consultants throughout Southwest Texas to help you for no charge. Just click the “Get Started” button at the top of this page to get in touch with us.
Step 1: Learn About Franchise Ownership Benefits & Challenges
Franchises offer many benefits compared to starting your own business from scratch, but they are not for everyone. Take some time to attend a seminar or workshop to learn about the differences so you can decide if it’s the right choice for you. To get started, sign up for a free workshop or webinar.
Step 2: Assess Your Personal Readiness
To begin your franchise journey, you and your family need to be prepared to invest a lot of time and emotional energy into starting the franchise. While the process to start a franchise can be much faster than starting a new business concept from scratch and many franchises eventually allow for a nice work-life balance, the launch process can take a lot of time up front. Are you and your family willing to make this sacrifice for a temporary period of time?
Step: 3 Assess Your Strengths
While the franchise you choose may be in a field you are experienced in, building a successful franchise is largely about making sales. So make sure you are comfortable with the marketing methods recommended by the franchisor. It could range from cold calling to networking in the community. Ask yourself if you are comfortable with these types of sales methods and can be good at them over the long term.
Also, if you or your family members plan to work in the franchise, assess your knowledge and management skills. Are you knowledgeable about how to successfully run the daily operations of that type of business?
Step 4: Assess Your Financial Readiness
Franchise costs can range from $500 to $1 million and up so you will need to be prepared with enough cash or financial backing to come up with a 20 percent down payment on a loan. On top of that, you should have access to capital to cover your living expenses for a year, business expenses for six months and if possible, some extra money to cover unexpected issues that come up. In addition, you may need to set aside a little more money for marketing up front to launch successfully.
Step 5: Determine Your Long-Term Financial and Personal Goals
It’s important when considering franchise ownership to first think about the end result you desire. Are you looking for an asset to eventually sell to pay for retirement? Or, would you prefer a business that provides residual income during retirement? The answers to these types of questions will help you decide which types of franchise is best to meet your goals.
Step 6: Determine the Best Type of Franchise for You
Do you want a business that you’re actively involved in or one that you can let someone else manage? How much time do you want to invest in the franchise? Are you looking for personal fulfillment by serving others in your business or simply a profitable income that allows for the lifestyle you desire? The answers to these questions will help you decide which type of franchise is best for you.
Step 7: Find a Quality Franchise in the Industry You Choose
Thousands of franchise options have cropped up over the years and not all of them are operated in the best manner. Make sure you research the franchise thoroughly by doing online research, asking existing franchise owners about their experiences and talking to a knowledgeable franchise consultant who has your best interest in mind.
Step 8: Research the Market Where Your Franchise Will Be Located
Before you make a decision about the franchise to invest in, make sure to thoroughly research the market where your franchise will be located. Many franchises sell the rights to certain geographic areas. Most all franchises have competition so you will need to figure out how much business you will need to gain to have the income you desire in your market.
In addition, the demographics in these areas may be more or less favorable to your franchise concept. For example, rural areas can be more challenging than cities for making high volume sales. A city’s culture can influence success as well. For example, in Austin, Texas, fitness tends to be a high priority for residents. So a fitness-related franchise could tend to be more successful there.
Step 9: Do Your Due Diligence
When buying a business, there are many financial and legal details to research and review. Investing in a franchise is similar but has a few additional considerations. For example, the franchisor is legally required to provide you with a Franchise Disclosure Document or FDD. Make sure to review the FDD carefully with a franchise consultant, CPA and attorney to make sure you understand it well. Also, be sure to talk with existing franchise owners to get a realistic idea of what it’s like to run that particular franchise.
Step 9: Sign the Papers!
After you have thoroughly researched the franchise opportunity, you will be ready to review and sign the contract. But first, be sure to have a franchise attorney review the final contract to make sure it’s in your best interest prior to signing it.
Step 10: Follow the Franchisors Training and Guidelines
One of the advantages of owning a franchise is that its founders have already experimented with many different operations and marketing techniques and have come up with a winning formula. While there is some opportunity to try your own techniques with certain franchises, sticking with the franchisors recommendations will give you best chance for success.
If you would like to explore each of these topics in more depth for your situation, FranNet Texas Southwest offers no-cost consulting in Texas cities including Austin, San Antonio, Waco, El Paso, McAllen, Brownville and Laredo. Just click the “Get Started” button at the top of this page to schedule your free consultation.