Writing for Business Advice, Steve Witt, co-founder of The Travel Franchise consultation company, outlines five key considerations to take before buying into a franchise.
For entrepreneurs who don’t want to create a brand new business from scratch, buying a franchise can be the perfect move. After all, the franchise industry is constantly growing every single year; with the industry growing by an incredible ten per cent in the last four years, contributing over £15bn to the UK economy.
In the UK, there are over 900 franchise brands alone including Boots Opticians, Kumon, Hertz and Subway, proving that buying into a franchise is becoming more and more popular.
However, being a successful franchisee is a lot more complicated than simply finding an appealing brand, plonking down some cash and starting to earn your millions. You should be prepared to face some difficult challenges when setting up your franchise business.
Here are five essential considerations to take if you are thinking of buying into a franchise.
1. Think about your finances
“Understanding your finances and the costs accompanied with franchising is crucial for your business,” Steve says. “You don’t want to run out of money when you’re on the verge of success!”
Before you buy into a franchise, consider how much the total investment will be to get your franchise up and running. This will include any initial purchase costs such as a franchise fee, your opening inventory and the amount of working capital you need to keep the business going until you make your money back
2. Do something you love
There is an age-old phrase; “Do what you love, the money will follow,” and it couldn’t be more true. While you don’t have to be great at making coffee to open your own franchise coffee shop, a passion and love for a cappuccino will take you a long way. After all, if you can find excitement and joy from your franchise business (even in the early stressful stage), you have a better chance of increasing your probability for financial success.
3. Consider your time
While beginning a franchise is different from starting your own business, it is still a business – meaning you cannot just sit around and wait for success to happen. Unfortunately, you will need to dedicate lots of your time, money and attention to getting your business at a successful level and so should consider carefully if franchising is for you before purchasing
4. Take support and guidance from others
One of the best parts of setting up a franchise is that you’re not alone in this new business adventure. In fact, there are many people buying into franchises each day and so you’re bound to find people who can help you out. Steve suggests; “When researching your chosen franchise, find out what kind of support they offer and what experience others have had.
5. Decide on your end game
As a huge fan of Stephen Covey, Steve explains: “Those who are most successful in franchising display Covey’s second habit of highly successful people, which is: Start with the end in mind’”
Before you take on this franchising opportunity, make sure you understand what your exit strategy will be. Will you leave the franchise for your children? Or do you plan to sell it on? The more you know and understand your exit plan, the easier it will be to select the franchise that supports all of your short term and long-term goals.
Steve Witt – Co-founder of Not Just Travel & The Travel Franchise
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