Is Franchising Right For You?
Operating franchises are extremely attractive investments. They come with proven systems, franchisor support and built-in infrastructure. This makes them much more likely to succeed than new businesses needing to be built from the ground up.
Even if the franchise is fairly new, the franchisor has done the hard work to develop the product or service and overall vision. Franchise companies provide training, structure, support, market expertise, and are invested in your success. An unsuccessful franchisee is a black mark on the entire system, which prospective franchisees take into account as part of due diligence.
Most franchise buyers share common characteristics. They are success-oriented, educated, family-minded and familiar with the workings of the corporate world. Usually they have some business experience, are comfortable with long-term commitments, and willing to learn new procedures. It’s also likely they’ll have enough cash reserves for the franchise fee, startup costs and operating capital for the time period before a positive cash flow is reached.
Startup costs are predictable. Actual experiences can be verified by talking to as many current and former franchisees as possible. There are many factors that come into play. For example, financing is available in many cases through the Small Business Administration along with the opportunity to use your IRA or 401K without penalty.