Published on January 1, 2009
Posted in: Blog
If you are looking for a career change, you may wish to join the many business people who have had great success turning to the franchise industry. But behind the enchantment and the “sizzle” of buying a franchise is a lot of hard work and thoughtful analysis. Not only does buying a franchise require considerable prior due diligence, it also includes a significant financial and emotional commitment. Understanding what franchising is all about and what to expect in a franchise system are critical to your successful transition to franchise owner. The following article briefly covers the first steps in evaluating yourself and a prospective franchisor.
Step 1 – Evaluate Yourself
Skills, Knowledge and Experience
When deciding whether to become a franchisee, and of course which franchise system to join, a suggested first step is to evaluate your skills, knowledge and experience. Through prior experience with a product of service which you may consider getting involved with is not a necessary requirement to being successful in a franchised business, you should match or compare your interests and skill set with your prospective franchisor’s system and business to ensure that they align with each other. For example, if a key to a successful operation of a franchise business lies in aggressive selling by the franchise owner and you do not enjoy sales or feel particularly capable of selling, your chances of succeeding even with an otherwise excellent concept could be greatly diminished.
Interest and Enthusiasm
To be a successful franchisee, you need to be interested in running your business and to be enthusiastic about your franchisor’s product or service. Though often overlooked, many positive results originate from an enthusiastic outlook. A positive attitude will motivate you through the cycles of ups and downs an entrepreneur may have to contend with. A positive attitude will likely contribute to a better business relationship with the franchisor; a positive attitude will be contagious and will inspire your employees and other franchisees; and a positive attitude will be noticed by customers who will be more likely to patronize your business.
Being realistic about your financial position will eliminate those franchise systems whose equity requirements are more than you can comfortably manage. You should speak with your business advisor to make certain that you scrutinize not only the franchise fee and the capital investment requirements, but also the cost to operate the business as a going concern. Once you have a good understanding of your net worth and the extent to which you can afford to invest, make an appointment with your lender to determine the amount of money that you can borrow. Be prepared for the interview because as part of their decision making process, lenders will assess your financial history and business plan and will likely conduct a host of other background checks.
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