If you are fed up of the nine-to-five job and want to be your own boss, then going for a franchise can be one real option. Before leaving your secure job and jumping into the arena to be a franchise owner with your hard earned money at stake, you must know the rules of the game to avoid surprises.
The business premise of the franchise model is simple. One person thinks of a good business idea and starts a business. It grows with time and is then replicated. To grow, it needs more fund, and for that fund to grow, he needs investors. Here he becomes the franchisor and the investor becomes the franchisee who invests in the business and runs it too.
The franchisor sets the rules of the game, and if convinced the franchisee (that may be you) will have to run the show as per such rules.
Rules of a Franchise Owner
1. Know your risk taking ability
You may have a family, children, a massive mortgage, old parents or some other personal issue that may not allow you to leave a stable job and go for your venture. The situations may not permit you to play with your savings. Every business has its risks and by better planning it can only be reduced, but cannot be eliminated altogether.
So before taking the plunge you must have clear understanding of your risk taking ability, or else you may have to resent the decision.
2. Properly understand the rules and conditions
Every franchise has certain rules to define the way quality and consistency of the product or service has to be maintained. If you do not follow them correctly then, the franchisor may discontinue the arrangement, and all the money and effort will go to drain. So before entering into any franchise, make sure you understand the rules and conditions and make a detailed plan to ensure that you can follow them.
3. Check your finances
Every franchise needs some funding from the franchisee, and you must know such needs and your ability to generate the required funds. For this, take hold of the information related to all your assets and liability and the difference is your net worth. This info will not only help you to know if you can afford a particular franchise or not, but you will need it to discuss the case with your franchisor to make them decide in your favor. Understand too, you may not earn a strong income from day one, especially if a ‘green territory’ so ensure also you also have funds available to not only live on for several months, but to inject into the franchise and cover costs.
4. How to search and identify the right opportunity
One way to find a franchise is to start surfing online. You may get lots of opportunities with tall promises, but don’t believe everything you read. We suggest you start the search by first understanding you and your constraints. Take a pad and write down the professional skills, your strengths and weaknesses; also jot down your financial constraints and limitations. In short, do a SWOT analysis.
Only when you are sure of the frame in which you have to look, search for a good franchise options that fits your needs. This approach will considerably improve your chances of success. Once you have some probable options that fit your requirements and financial constraints, the next stage needs collecting information about these options and researching the market.
To start with, talk to the company representative. He will answer some questions. Another good way to get the information that the company may not give is to talk to another franchisee owner. To support the info search the net and collect as must input on the experiences of people as possible with a targeted company.
With this approach slowly the bigger picture will start getting clear making the decision easier with each passing day.
Probably one of the most important terms you should do is to go through the franchise agreement. Read it multiple times. Do you understand every single clause? Sometimes the terms (rules) can be somewhat unfair. Then see a franchise specialist lawyer. Yes, they will cost money, but next to purchasing your own home, this is likely the biggest transaction of your life and probably on with potentially far more risk than buying a home.
Once you are through with the steps, you will have one or two best franchise options. Make your business plan for each and contact the company. The rule of the game is to choose the right opportunity that fits your needs, and then work hard. This way you are sure to win.
Need help with your bookkeeping when you do your franchise? Check out Stone Consulting. They will be happy to help.