Starting a franchise is not a decision that should be taken lightly. In order to be equipped for success here are 10 things to ask yourself before you start a franchise:
- Do you plan to open at a prime location? The phrase “build it and they will come” often only applies to prime location where there is already a lot of traffic from potential customers. If you have a bad location, it will properly be an uphill battle from the very beginning.
- Are you in a city/town/area with a negative or positive population growth? If the population growth is negative, it might be a bad business in the long run as there will be fewer and fewer potential customers.
- What is the ROI on your franchise investment? How long will it take, even with conservative budgets, to make your investment back. Is it an acceptable time period?
- If you take in outside investment or loan to start your franchise, look into if you can negotiate a flexible repayment plan. Example: If your business is doing poorly one quarter, then have this reflected in the repayment plan, so you don’t have to pay a fixed high amount. In today’s market, many lenders and investors are flexible as they have no interest in seeing your business default. Just make sure to negotiate this beforehand, as this will give you additional peace of mind when than inevitably bad quarter hits your business.
- Do you have the support of your friends and family? Starting a franchise requires a lot of hard work and long hours. Are your friends and family in understanding with the fact that you will be devoting a lot of your time – especially in the startup period – to this endeavour?
- Is the franchise going to rely on you? What happens if you fall ill for half a year – can you setup an organisation that can function without you involvement?
- Is it a product that your customers want? Do you just assume, that the franchise will be popular or have you been out in the field actually asking potential customers of what they prefer? Consider making a market research.
- Are there competitors in your area – and how are they doing? If you have any direct competitors in your area, you will find that if they are struggling, things will properly be the same for you. Also, the advantage of having competitors is to ask their customers what they like and dislike, beforehand you start your franchise. That way you get valuable information you can adapt to.
- Is it on trend? Will the franchise still be attractive in 10 years from a consumers point of view?
If you need more important answers to ask yourself before starting your franchise we recommend you looking into the 500 questions to ask yourself before starting, selling or investing in a business.
Please let us know in the comment section below what other important questions you should remember to ask yourself before you start your franchise. We’d love to get your input!