As you are about to start your journey as an entrepreneur, there are some key points that need to be addressed to become a successful franchise owner and to avoid bad surprises.
- Goals: What are the reasons to buy a franchise? There can be multiple answers such as you need a specific annual income, you have an interest in some industry, and you are interested in a product or a service. Will you operate the business yourself or hire a manager? Franchise business will be your primary source of income or a secondary? Do you have long-term goals? Would you like to own several outlets? Answering these questions will help you investing in the right business opportunity.
- Franchisor’s Credibility: The reputation of franchise business opportunity should be untainted and should have a good record in franchise association. So contact someone at International Franchise Association, Canadian Franchise Association or Provincial Franchise Association. Moreover, you can talk to existing franchise owners to establish confidence and business record. You can check news about the franchise business to know about any pending legal action or litigation. Try to ascertain about the failure rate of the franchise, as it is a major red flag.
- Demand for service or product: Check the consumer demand in your area and whether it will continue to grow. Who are the competitors and will you be profitable in that competitive environment in future. The product or service should have a differentiating factor and better quality than competitors. You should be confident franchise success in your marketplace.
- Your Skills: A number of franchises look for certain skills to become potential franchisees, so is there a typical franchisee profile for Franchise business opportunity. Any educational or other requirements the franchisor would ask of you. Do they provide any special training? A franchise can also fail, so will you be able to run the franchise without suppliers, marketing, and management support.