There are literally thousands of franchises available for entrepreneurs to purchase in the hope of making a small business profit. So how do you go about identifying the best option for you?
• The first thing to do is make sure you understand what you really want. This is critical because you will fail if you don’t understand what motivates you to buy a franchise, such as the type of business that gets your business juices flowing, what product and/or service you want to sell, and how much time/money you are willing to put into the business. If you don’t understand what drives you to buy a small business franchise opportunity, you probably won’t prosper.
• Available franchises come in all shapes and sizes and with a wide variety of business models. Some franchisors want tight control over their brand, so they will require franchisees like you to adhere to very strict marketing and operational guidelines. Other franchisors have a much more flexible approach to managing franchisees and will allow more freedom in how each business is operated. Ask yourself if you can tolerate having to follow a standard model for your business that makes you look like so many others across the country. If you are more of a solo entrepreneur, try to find a franchise network that gives you optimal freedom.
• If you are new to the business world, you will probably need more support from your franchisor. Support can come in the form of marketing materials, business agreements with national vendors that provide substantial discounts, and one-on-one operational support to set up the business structure. Once again, franchisors differ widely in the marketing and operational support they provide. If the support offered by a franchisor is not sufficient for your needs, then you may want to look for another franchise buying opportunity that provides better support.
• Make sure you understand what you can pay. The purchase price of a franchise is often just one of the many costs you will have to cover. Franchises that offer recognizable products and services typically command a much higher purchase price and, in many cases, charge higher royalties, which are typically a fixed percentage of total revenue over a specified period of time. The advantage of buying one of these franchises is that it takes less time to generate income because name recognition has already been established. Many entrepreneurs may prefer to purchase a franchise that is less well known but also costs less to buy and has lower royalty fees.
Purchasing a small business franchise opportunity should be seen as one of the most important decisions an entrepreneur will make, because it really is! For this reason, a thorough franchise analysis should be done at every opportunity considered to ensure he makes a decision he can live with for the foreseeable future. Identifying the right franchise opportunity will likely make the difference between an impressive profit for a small business and ultimate failure.
