Don’t Reinvent the Wheel. Buy a Franchise

Have you ever wanted to start your own company but hesitated at making the big move? If so, you’re not alone because millions of prospective entrepreneurs stop short just before opting for the startup route. They cite all sorts of valid reasons, like not having enough capital, now knowing the market well enough, the fact that competition is too stiff, and many other credible excuses. But what if you’re not happy with the corporate world either? Perhaps you loathe the idea of working a 9-to-5 job for a major company where your ideas and proposals count for little. If that’s the case, consider a middle ground where you can be your own boss but still have solid support from a larger organization. Think about buying a franchise.

The Upside

What is the upside? Franchisees typically point out that they get to make their own day to day management decisions but still get help from the franchisor, the company that owns the name and concept of the business. Most fast food, auto service, and restaurant businesses operate under this model. The standard variation allows for you to buy in and run one or more business units, for example, a fast-food location. The person who created the company and the concept behind it sells you a license to run one of their stores as an owner/manager. Each franchisor has a different arrangement about how much control they give to their franchisees. In some cases, you have full rein and make 99 percent of all the decisions about the business, even where to locate it. Other owners are strict and give up minimal control. If you buy into their business, you end up primarily as a manager of a single store, located in a pre-set spot, and are obligated to purchase all your inventory from them.

Prepare Yourself Academically

If franchising is a long-term goal for you, consider getting a college degree in business or marketing. Many of today’s top companies won’t consider your application unless you hold at least a bachelor’s degree and have a couple of years of work experience. Getting a student loan to finance your studies is a smart, convenient way to earn a diploma relatively quickly. You can opt for online study and work at your own pace on weekends and nights while getting work experience. Plus, education loans from Earnest offer reasonable interest rates, competitive terms, and longer repayment periods. 

Because there is such a wide range of arrangements, you need to spend time doing research on which companies are a good fit for you. Carefully consider what it is you want to do and have the ability to do. Check out lists of available franchises at online databases. There are numerous websites and government resources that offer lists that include thousands of available opportunities. When you’re in this exploration phase, try to focus on just one or two major industries, like automotive services and restaurants, for example. Pick major categories that appeal to you and interest you.

Select Industries

There’s a sweet spot for most people at the point where your skills and likes intersect. If you enjoy playing the stock market and have solid numerical skills, then an online brokerage business might be for you. Avoid industries that you either dislike or know nothing about. For example, even if you have great managerial skills but happen to abhor the idea of operating a restaurant, stay away from fast food outlets. A good way to begin the selection process is to make a list of several industries that interest you. Put them in a column on a sheet of paper. In the second column, write down four or five skills you have, based on relevant jobs you’ve held in the past and on proven experience. Then, with both columns in mind, search through the industry lists of opportunities. You’ll be able to hone in on a few key opportunities in just a few minutes if you take the time to make a detailed list.

Search for Quality and Market Demand

Once you’ve decided on a couple of industries, try to locate companies that have been around for a few years and have demonstrated the ability to put out a high-quality product or service to a market that has more than average demand. Don’t hesitate to do your own research and to contact franchisors to ask them questions. This is an ideal way to hear what they have to say and see how they are able to explain current levels of demand and future growth trends, but don’t take their word for it. Read online consumer and employee reviews to get a feel for what the company is doing right and possibly doing wrong. Check the employment review sites to read what past and current employees have to say. This can sometimes give you a solid feel for whether the franchise would be a good fit for you. The same goes for consumer review sites. Many offer an inside look at the overall reputation a company has. If you see too many red flags, stay away.

Research Your Potential Competition

Do research on your local market and consider the potential challenges you will face. Try to see how many other franchise owners in your area offer a similar or identical service or product. If you begin to notice that the local market appears to be inundated with that particular product/service, it’s probably a good idea to move on and examine another opportunity. Discuss the proposed training and corporate backing you would get if you signed on with a particular organization. Dig in and find out what their marketing plan is for new franchisees and what the standard business plan is for new stores. Find out about ongoing support and training. Read through a copy of a typical contract to discover all the legal obligations you and the franchisor will have if you sign an agreement. Based on all your research, interviewing, and hard work, decide whether to move forward and formally apply for a license to operate for a particular company. Expect to wait at least a month before you get a decision from management.