Many people aspire to start their own business, but the prospect can be daunting. Apart from the capital and the strong desire to succeed, it is important to consider the value proposition of your business and the key elements that your business requires to be successful.
Working in a network of others who have the same aims and goals can be much more appealing and following a proven model can be a more effective path to starting your own business - it's your business, but you have training, support and a successful brand behind you.
According to statistics from the latest NatWest bfa Franchise Survey published in January 2014, more than 90% of franchises are profitable within two years of operation. In contrast, more than half of other types of new businesses fail within five years.
But what questions should you ask yourself when considering franchise opportunities?
Does the franchise's industry, product or service interest you?
Ask yourself whether the product or service that the franchise offers suits your own interests and abilities. Is it something that you like and would you buy it yourself? Does it inspire you? The last thing you want is to be stuck doing something you don't enjoy - that's probably why you looked at franchising in the first place. A lack of passion about a product or service could mean you tire of the franchise quickly and therefore fail to make the best of the opportunity. As the saying goes, 'do what you love, love what you do'.
Will this franchise help you to achieve your personal and professional goals?
Many people look at franchising as an option because they want the independence of being their own boss without all of the risks, they want to generate their own income that replaces their current salary, or they want to achieve a better work life balance.
It is important to consider whether this franchise is right for you, your own particular needs and goals. Having a plan in terms of your professional, family and business aspirations will help you to identify your priorities when considering investing in a franchise business. If working part time is important to you, does this franchise allow for that? If income is the reason you're looking at franchising, will you be able to generate enough and will it last for as long as you need it to? What happens when the franchise comes to an end?
How much investment is required and how much money can I make?
The level of initial and ongoing investment and earning potential or return are two of the most important factors to consider when buying a franchise. You should make sure that the franchise provides clear information about the capital necessary to invest, starting fees, and monthly fees. Assess these in line with what you will get in return in terms of profit, income, training and support. Basically, is it good value for money? If the franchisor is not open about fees, then that could be a warning sign.
What support will I receive from the franchisor?
This comes back to whether you will be receiving good value for money. One of the main benefits of buying a franchise is that you should have access to the relevant tools, training and support to not only get you started with your franchise business, but to develop and grow it during your agreement term. It is extremely important to know the details of any mentoring, manuals, guides, systems and ongoing support that you will receive that will ultimately impact on your success.
What do existing franchisees saying about the franchise?
Learning from your own experience is the best way to obtain first-hand information, but the second best way to do this is to hear from people who have already done it. A good source of information during your due diligence is online case studies, which can provide clear examples and stories of other people's experiences, views and expectations. Forum reviews and Google searches for third party opinions can go a long way too.
This should also give you an idea of the kind of franchise community there is and their combined values. Is this a network and group of people you could see yourself working with?
How has the franchisor dealt with you?
Speaking to and meeting with people involved in the franchise will give you an insight into their level of service, transparency and integrity. Do they practice the values that they preach and are the people genuine? If they've answered all of your questions honestly and given you everything you've asked for then there is a good chance that this is a robust business model run by an organisation that does the right thing for its franchisees.
These are just a few questions to consider when looking at franchise opportunities. However, any reputable franchisor should be willing to help you through your due diligence and provide you with answers to some additional questions you might not have even thought about.