Top Five Questions You Should Ask Yourself before Buying a Franchise
Buying a franchise gives an individual the opportunity to become an entrepreneur by investing lesser money in comparison to a fresh new business. This is one of the greatest advantages of becoming a franchisee – you become an entrepreneur just by investing your money into someone else’s business idea.
With lots of other advantages that it offers to a prospective franchisee, franchising has become quite prevalent among new entrepreneurs. Despite all the advantages, a thorough research should be conducted from your end before plunging into a venture. There are some questions that you need to ask yourself before you buy a franchise. Read on to know what these questions are.
What Makes you Think of Buying a Franchise?
There will always be several things that entice you about a brand, but your response should reflect upon what you want to achieve. Franchisors call out to franchisees for their own benefits; hence, they would give as much convenience to the prospective franchisees to achieve their own goals. However, it’s your responsibility to take action for what you want from franchising. Do you want to pursue it as a hobby or you want it as a primary source of income? Do you want to invest your money or you want to taste the success of entrepreneurship? The first question to ask yourself is: What makes you think of buying a franchise?
What are you Good at?
Examining your own skill sets will help you determine your potential franchise business. For instance, there are many different roles that you have to take on as a franchisee, so only if you can perform those roles, franchising is for you. If not, then it would be better if you start some other venture or choose a franchise that provides you with the opportunity to make use of your skills.
How much money do you have to invest?
Now that you have decided why you want to get into franchising, you must keep a check on affordability. One thing to remember is that you can’t invest all the money you have in the initial stage of your business. Inventory of your capital is also quite important in the sense that you should have enough money to live off while you are struggling with the business.
Ask yourself if you have enough money to invest on such a big venture like buying a franchise.
What’s your Exit Strategy?
Your exit strategy plays a big role in deciding which franchise you should choose depending on how long are you planning to be a franchisee: five years, ten years or till you pass it on to your heir? It’s important to decide your strategy for exiting the franchising system as there are not many franchisees that are scalable in the first place. So, make sure you have decided on how many years you are going to stay in the business so that you don’t have to unwillingly continue being a franchisee.
What are the Risk factors?
Once you have given a thought over all of the above-mentioned points, you should be able to calculate the risk factors involved in a business. Go thoroughly over various franchise opportunities and conduct a research about its franchising history. It will be easy to calculate how much risk you could bear in the losses.
Once you get the answers to these questions, you just have to choose the right franchise and you’re good to go!