In the guide 'Steps to buying a business' we explore your suitability to run your own business. If you think franchising is right for you, you should take into consideration:
- background in respect of the franchisor. This includes the experience of the directors of the franchisor and how long they have been offering this particular business system, how the existing franchisees in the system consider their support and do they recommend the system.
- The franchised business needs to be assessed in terms of the business itself, its overall market potential and its existing or likely competition.
- Financial considerations - is the business an existing or a new or greenfield site? What return on investment is being achieved by other franchisees? How long it will take to achieve profitability necessary to support your required income levels? What fees are payable and what potential is there for capital gain?
- The Franchise Agreement needs to be reviewed and advice sought from a franchising lawyer.
- The franchise territory needs to be assessed as to whether you gain an exclusive territory or if not the likelihood of further franchises being offered in the territory.
This is some of the due diligence required by you in considering whether the franchise itself is a good investment opportunity. But there are further factors relevant to whether the franchise is right for you. If it has passed the above hurdles and is worthy of further consideration, you should consider more personal issues.
- Is the location near your home or are you required to relocate to another location to make it work?
- Are you prepared to follow a system are you too entrepreneurial that you would prefer to adopt your own ideas?
- Is the business sector one that is growing or one that may be stagnating?
- Do you have sufficient capital to suffer unforeseen difficulties?
- Have you prepared a detailed business plan and a detailed exit strategy that fits within the parameters of the Franchise Agreement?
Ultimately you may consider having a similar demographic analysis done in respect of the site, particularly if you are acquiring a greenfield site.
You may even consider consulting a corporate psychologist like Greg Nathan to have him assess you as to what sector he thinks you would be most suited to.
A detailed business plan that you have prepared in advance of searching for a franchise can help you ensure that your plans and aspirations detailed in the business plan are met by the particular franchise you are considering. Issues such as hours of work may well impact upon which franchise is right for you.