The Making It! Spring 2008 Newsletter

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Although franchising is often viewed as a lower-risk path toward entrepreneurship , jumping into this type of business also comes with its potential setbacks. Before you attach yourself to an already-established brand for the sake of what seems like greater security, make sure you consider the following before taking that first leap:

Evaluating Your Needs & Goals:

The first step to franchising is to evaluate your financial and life goals to assure that they align with the company you’ve chosen. Do you have a certain income you would like to achieve, or a certain creative goal or image? And do you really have enough money to cover not only an initial investment, but start-up fees? And what special skills do you have that could apply to specific franchises?

Costs:

According to the Federal Trade Commission’s “Consumer Guide to Buying a Franchise,” the initial cost of purchasing a franchise can run hundreds of thousands of dollars, and franchise owners are responsible for initial, often non-refundable fees. In addition, just like with any business, start-up costs should be expected. Instead of expecting lower costs with a franchise, make sure that you are aware of the level of investment that you have to be ready for.

Level of Support:

It is crucial to determine the amount of support that you can expect from the franchisees. One way to determine this is to simply look at the number of years that the franchises have been operating. Does your company have a history of well-run, profitable franchises, or is it a start-up that is just beginning the foray into selling its brand? Make sure that the level of support matches your needs and that the company will stick with you after your initial training.

Creative Control:

Do you want to own your own business for the sake of controlling your destiny? Well, franchising might not be the best choice. Most companies have strict standards for locations, advertising and promotions for their franchisers. If you want to adhere to a well-established, successful standard that has stood the test of time, then franchising would be perfect for you. But if you would like a business for the sake of not only financial but creative freedom, perhaps starting your own business after a little research would be a better choice. However, if security is a greater concern, buying a franchise could be ideal.

Growth and Competition

Be sure that the franchise and its location is competitive in your desired sales community. Perhaps choosing a unique franchise that others haven’t heard of might be a better choice for generating customers and for garnering more creativity within yourself. Also, a new franchise is more likely to be open to your ideas as it is still growing.

Just like with any other business start-up, franchising requires research, financial security and the ability to take risks, even if they seem smaller than usual. Before jumping into what seems like an easier choice, make sure you have thoroughly evaluated franchising so that you can take your leap into business ownership with confidence!