You’ve decided you want to buy a franchise, consulted a franchise attorney, and confirmed you have the means to move forward. Now comes the fun part: deciding on a franchise. From retail stores and restaurants to professional services and home-based businesses, the landscape of opportunity is vast and open for you to explore. As you go through the process, here are some important questions to ask yourself to find the right franchise for you.
1. How and when do I want to work?
Are you the type who thrives on working full-time and overtime, or are you looking to wane your working hours and let someone else stand in as a manager? Be honest with yourself, and consider the times you’re willing to work as well. For example, if you don’t want to work nights and weekends, a restaurant—with peak business during nights and weekends—might not be an ideal fit.
2. How long do I want to work?
Let’s say you’re in your late 50s and sign a 10-year franchise term. That would take you past the traditional retirement age of 65. Many franchisees are willing to work beyond that benchmark because they are fulfilling their entrepreneurial aspirations; nevertheless, an exit strategy is a key consideration when buying a franchise. Talking about exiting when you’re just getting started might seem counterproductive, but it’s the nature of financial planning.
3. What are my strengths?
Franchise brokers will often give franchisees a personality test to identify what they enjoy in a job, what they dislike, what they’re good at, and what they’re not. Even going through this exercise using your own devices can be valuable. If you don’t love making cold calls, for instance, you wouldn’t want to buy a franchise that requires the owner to be the lead salesperson. Again, be honest with yourself—buying a franchise is a big decision.
4. What lifestyle am I looking for?
Your work preferences and lifestyle go hand in hand, and thus should mirror each other as you’re identifying the type of franchise you want to buy. Many franchisors provide earnings claims that allow you to get an idea of what the highest performing and lowest performing franchisees make in a year. Let’s say you need to generate $300k of take-home pay; this could very well mean you need to purchase multiple franchises in order to live the life you envision.
5. How much risk am I willing to take on?
In a retail setting with potentially thousands of square feet of space, you could easily be obligating yourself to $500k or upwards of $1 million for a lease. In most cases, retail leases require you to have a personal guarantee for all or part of the agreement. If these numbers and commitments sound nauseating to you, a home-based business with no lease could be a safer play to test the waters as a new business owner.
6. Do I need to bring in partners?
If you’re risk averse and/or struggling to find a viable opportunity within your budget, it might make sense to seek one or more partners to purchase a franchise as a group. If you’re involving partners, be sure to clearly define their roles early in the discussions to avoid miscommunications down the line.
7. What is my end goal?
Are you following a passion, or simply interested in return on your investment? These two avenues can and should intersect, but one will usually take precedence over the other.
The old saying goes, “If you don’t know where you’re going, any road will get you there.” Asking the challenging questions in this article will help you know where you’re going and work toward your goals. Meanwhile, the franchise attorneys at Soden & Steinberger, APLC are here to advise you throughout the journey to becoming a franchisee. Contact us at 619-239-3200.