If your flight has been called and you are not yet at the gate, there is good reason to make a spirited dash to the departure gate.
There may be many examples where there is a viable reason to rush through things to get to the end. However, when thinking about self-employment and entrepreneurship, there is little reason for anything other than a planned and sometimes cautious approach.
There are many variables to consider, and each needs appropriate time and research. If franchising is the preferred route into owning one’s own business, then timely research is still the order of the day. The franchise marketplace today has literally thousands of opportunities, and the good news is that with a franchise you can invariably gather a great wealth of information to enable you to complete the appropriate due diligence exercise.
Pursuing a franchise opportunity is, for most people, a life changing situation. Many would-be franchisees have been in a corporate employment situation – often for many years – and stepping into a franchise might, for some, seem like stepping into the unknown.
There should be no hurry – the franchise will not take off without you. As you work through the process there are many aspects to consider, review, and research. Each aspect demands a thorough review to ensure that you are not flying ‘blind’ but have all of the appropriate data.
Some of the specific areas that you need to review are: the type of franchise, location, structure, and your own legal framework.
In reviewing the type of franchise to pursue, most people have a fairly set view of what they would like to do. Many, perhaps inappropriately, think they can turn their ‘hobby’ into a business, and that business already fits an established category. Be careful. While on the face of it this makes sense, something you enjoy turning into your own business may not work for you or the franchisor. Always remember that a franchise is a tried and proven system.
Turning a hobby into a franchise invariably means doing the thing you like to do in a completely different manner and time frame. Under a franchise format, what you did as a hobby becomes a business designed to operate on regular hours to make a profit at the end of the day.
Franchise location is something to explore with the franchisor. Most, but not all, franchises come with a fixed territory.
The first question is naturally – is there a territory available in my immediate area? If not, then is relocation an option? The franchise review process now takes on an additional dimension as you start to consider the ramifications of relocation of, maybe, not just yourself but your entire family. The cost of that relocation must also be factored into the overall cost of the new franchise operation. Will it now take longer to reach the break-even point?
When examining franchises you will readily realize that there are numerous business models to consider. Some franchises, as we have stated, are territory dependent; some require extensive premises and build-out facilities, and many will require staff and specialized equipment.
The franchise structure will also vary in terms of financial requirements. Some will require a fixed amount of capital and expenditure, and in some cases franchisors offer financing packages or arrange those on behalf of their prospective franchisees.
Some franchises have an offering whereby there is only the need to pay a one-time franchise fee, and then the franchise is royalty free. Such an arrangement usually requires the franchisee to acquire products or services exclusively from the franchisor, at the franchisor’s stated price level.
While this is at best a very brief overview of some topics that need to be on a prospective franchisee’s investigation list, and they certainly are just a brief selection, there is always help in the research area in the form of a disclosure document. This sometimes lengthy document will answer many of the basic questions surrounding the model on offer.
What it cannot address is how you as an individual will fit into that particular franchise model. This is where your own detailed and sometimes time-consuming research must take over. In looking at the relocation issue as discussed above, the disclosure document will not necessarily have the answer.
Research into the new location, not only for the business but perhaps for a family relocation, will take time and energy to pursue.
As you start to look at franchise models and types, you may become overwhelmed at the variety and sometimes complexity of the individual models. Prepare a basic plan ahead of time so that you are not easily distracted from your main line of enquiry.
The bottom line is naturally to end up in a business where you are comfortable, and where you can clearly see the profitability of the business over the appropriate time span. Getting to the bottom line is not something that should be hurried. You can’t buy a franchise off the shelf, even if it is a proven brand. Research and then maybe some more research are the prime requirements to ensure that you end up with the right choice for you.
David Banfield is President of The Interface Financial Group, a position that he has held for over 20 years. He has been instrumental in starting Interface as a franchise opportunity and building it to its current international status. Prior to his involvement with Interface, he worked extensively in the banking, credit and factoring financial service areas.
For more information: Website: www.interfacefinancial.com