How to Pick the Franchise That Is Right for You

For new entrepreneurs or those looking to venture into a different area of business, franchises have a decided appeal. You get to work with an existing brand instead of having to break new ground, there is a ready-made customer base, and the parent company is there to support your success. The hardest decision in the beginning is which franchise to buy into.

Like all business decisions, this one requires careful consideration beforehand. How do you choose? Quantitative information such as year-on-year profit growth and location demographics may help you make a smarter business decision, but you’re going to find that certain products and brands resonate with you more than others.

Here are some questions you can ask yourself to narrow down the possibilities.

How involved do you intend to be?

Do you want to be directly involved in the daily operations? If so, what are your preferred working hours? Entrepreneurs who prefer the 9-5 workday will be more limited in their franchise options unless they are prepared to hire evening or weekend managers. Additionally, the amount of freedom given to you to run the franchise as you desire can vary depending on the franchise  you choose. Ask yourself whether you want more structure and restrictions or a franchise that offers you significant freedom and space to operate the business.

What is your area of expertise?

Take a close look at your skillset. Are you comfortable with or, even better, do you like dealing with customers? Customer service is the foundation of any successful franchise. If this is not your forte, you’ll need to hire managers who do have excellent customer service skills.

Your personal preferences need to come into play as well, as successful franchises generally have owners who are passionate about the product or service. For example, if you don’t like animals, a pet store wouldn’t be a good fit.

How much money do you have to invest?

Some franchises are more expensive to buy into than others. When deciding which opportunities meet your budget range, remember that your new venture might not be popular and profitable right out of the starting gate, so you’ll need to account for living expenses while you build up the business.

How much risk are you willing to assume?

After going over your financial situation, you’ll have a decent idea of how much risk you can safely assume. Next, ask yourself how much risk you feel comfortable assuming. The newer, leading edge business represent higher risk, but the potential returns are also higher. Well-established companies may present a safer investment, but not all of them are cutting edge any more and the returns can be lower.

What’s your exit strategy?

This is a question that a lot of aspiring franchisees skip. Ask yourself honestly what your future plans are. Is this something you want to do for a few years and then sell? Or do you intend to build something that you can pass on to a family member? Different franchisors have restrictions on who you can sell to, while others aren’t designed to be scalable in the long run.

Before deciding what franchise to buy into, it’s important to know what motivates you to jump into this exciting realm of entrepreneurship. Ask yourself what you want to accomplish, and let the honest answer guide you.

If you are planning to buy into a franchise, call the Wilson Law Group at 1-804-477-7243. We can review franchise agreements and disclosure documents to give you the honest and accurate advice you need to make an informed decision.

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Wilson Law Group

Jim Wilson is the founder and principal attorney of the Wilson Law Group. For the past 25 years he has been combining legal dexterity with an entrepreneurial mindset to help aspiring and established business owners start, finance, buy, sell, and run their companies.

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