To buy a franchise…or not to buy a franchise…that is the question…The following information should help you find the right answer!
Making the decision to purchase a franchise needs to be given serious thought, research and consideration of all options available. Franchises have experienced annual growth of more than 50% – and are now also popping up in airports, railway stations and inside supermarkets.
There is intense competition for new franchisees -so don’t bow to pressure to sign on the dotted line – until you are 110% certain that your decision is the right one for you. With the huge choice of what to go into – home services, personal services, financial services, retail, fitness, food, health and beauty, etc, etc – ensure that the one you choose is aligned with your existing skills and something that you have a genuine interest in.
Attend franchising seminars and collect all relevant information and data. Make sure you ascertain details on: upfront franchise fees; training fees; location fees; and ongoing franchise and advertising fees. Find out how long the franchisor has been operating; what training and support they offer; what track record they have; are they f inancially stable; do they undertake demographic checks on potential sites; the success rate of existing (and past) franchisees; and how much control they exert.
Remember – there are no guarantees when purchasing a franchise – success in one location does not automatically ensure success in another! Your franchise may not become the immediate gold mine that you envisaged -it may take several years before you even reach breakeven.
Analyze your costs and know your numbers: what is the ratio of the rent to turnover; salaries to turnover; fixed costs to turnover. If you are borrowing the start up costs – make sure you factor in your loan repayments. Research the best method of borrowing the money – a business loan, a business mortgage loan, interest and principal, interest only??
Be aware that if you fail to follow the guidelines as laid out in the contract – the franchisor may, with warnings, terminate the franchise agreement. Ensure that you get written substantiation to cover any earnings representation.