09 May 16 Questions to Ask Yourself Before Opening Your Own Franchise
Franchising isn’t for everybody. You have to have the right attitude and perspective, you have to be willing to work hard and smart and most importantly, you have to be committed to running someone else’s system.
Here are some questions which will help you to decide whether franchising is the way to truly be your own boss. Many of the questions have to do with the reality of the experience and things that you will need to evaluate yourself and things that need to be discussed with your family.
Question 1: How is your physical health?
Franchising requires quite a bit of time, energy and commitment. For your franchise to be successful, you will need to devote quite a bit of your own personal energy into it. If you are not in good physical health, therefore, franchising might not be the best fit for you.
Question 2: What proportion of your assets would you be willing to risk in a franchise? Calculate the value of your assets including savings, 401k, salary and other assets that you own outright.
You will, of course, have to invest quite a lot of your own capital in the venture. Most of the time lenders will require around 30% of the project cost as a down payment. Calculate the financial commitments you have at present – mortgage, cars, education etc. Could you afford the temporary drop in income that usually occurs in the early life of a new business? During the early months of new business cash flow problems may result in income from the business being lower than expected. Are your financial commitments such that you could manage on less income than you have now?
Question 3: Do you think your partner will be willing to give you full support?
There are always problems and difficult periods even in a successful franchise, and it is during these times that you may need a bit more family support than usual. Is your partner aware of and happy to share the risks involved? Having discussed the franchise idea with your partner, ask him/her to make a list of their concerns and worries. Everyone has got to be onboard.
Question 4: How do you think your partner would react to the disruption to the family life that starting a new business entails?
This could range from a few missed meals to to skipping an annual family vacation and working long hours. Although not usually long term, it is a real fact. The last three questions have been asked because of the importance of family support. You should of course have discussed the franchise idea fully with your partner. Many franchisors positively encourage the involvement of spouses or partners in their discussions with franchisees. But you should also ask yourself whether your relationship would stand the strain of the sacrifices, which are inevitably involved in starting your own business. Be sure your partner is not going along with your ideas just to make you happy; make sure he or she is as committed as you are.
Question 5: How many extra hours above a standard 40 hour week would you be prepared to work as a franchisee?
As you will be aware, running a franchise could involve you in much more than a 9.00 to 5.00 weekday job. You may have said that you would be willing to work 20 or more hours extra. Is this realistic – what would you give up in a week to work those extra hours? If you said 2 or 3 hours or more, do you really have the commitment necessary to succeed in a new venture? It is your business and you have to spend all of the hours necessary to make the business work.
Question 6: What reaction would you have to receiving strict guidelines by the franchisor on how to run your business?
If you value a high degree of autonomy and want to make your own decisions on how to run and develop a business, then franchising is possibly not for you. The franchisor is in ultimate control and resentment of this in your part will make the relationship very difficult.
Question 7: What involvement would you expect from the franchisor in resolving problems encountered in running the franchise?
Although the franchisor should help you with certain types of problems, do not expect assistance with day to day normal business issues. Ideally the franchise company should provide you excellent training and field support. You need to pick a franchise based on the type and level of support that you want. At the end of the day, it is your business and you have to be committed to running it.
Question 8: If you see improvements could be made to the environment in which you work, how determined would you be to change them for the better?
In running a franchise, you will be expected to go by the rules, not change them. A franchisor will generally not allow you to ‘personalize’ the business. If you will be unable to resist making changes, then franchising is probably not for you.
Question 9: What would be your reaction to do tasks, such as serving food or cleaning tables?
You may need to do a lot of the dirty work yourself, particularly in the early days. If you don’t want to get involved, make sure that profit margins are sufficiently high and you have enough working capital to enable you to take on staff.
Question 10: In your present employment, are you used to taking financial decisions?
The franchisor will be concerned if you have had little or no financial experience. Are you convinced that you have the necessary financial skills and knowledge? You have to know the basics, being able to use Quickbooks is a plus.
Question 11: Do you think you have the talent and skills that are required to market and sell your service or product?
Local Store Marketing is essential to the short and long term success of the business. While most franchise companies have marketing tools and social media platforms to help you drive business, initially it is likely that you will be the face of your business. Can you present your business at a Chamber of Commerce meeting? Are you willing to get out into the community and go to other businesses to sell your product or service? Do you have the personality?
Question 12: How good do you think you are at motivating staff?
If you have had problems with staff in the past and have blamed them, are you sure the problems were with the staff and not in the way that you dealt with them? Again, some franchisors may be concerned if you have had no experience of staff management.
Question 13: Have you had frequent changes in jobs?
If the answer to this question is yes, are you sure that franchising is something you really want to commit yourself to and that you aren’t just looking for yet another change? On the other hand, if you haven’t moved jobs a few times in your career, are you sure that you are suited to the different lifestyle, which you may face?
Question 14: What are your feelings on job security? Some people like a lot of job security, while for others this is not important.
Think carefully if you don’t like insecurity, are you prepared to give up the comfort of receiving a regular salary?
Question 15: Can you deal with stressful situations?
Running your own business can be very stressful, you must be able to deal with stressful situations that occur on a regular basis.
Question 16: What do you think can go wrong with you buying a franchise?
List all the things you can think of that can go wrong together with all the effects that running one would have on your personal and family life. A short list will probably indicate that you have thought the issues through properly. You should have a long list which may, in the end, make you reconsider yourself as a potential franchisee.
In summary, the franchise business is a fantastic business and has made many, many people wealthy beyond their wildest dreams. I know from personal experience that it is satisfying on many levels and is a wonderful community to be a part of. Be smart about your due diligence and be open and honest with yourself and your support system and you will make a well-educated decision.