As we continue this series I want to dig deeper with you on why you would want to pursue purchasing a franchise opportunity. Specifically into choosing a franchise brand that is right for you.
As I said in my previous blog, choosing to franchise means you are choosing to buy a brand. All to often franchise companies and potential franchises think this means how known, how visible, how old, how large is the brand I am considering. I am not undervaluing this as a primary consideration. Depending on your risk adversity, this may be a huge factor in choosing your franchise brand. I however I am a big believer in making sure the shoe fits.
Let’s break this down into a few concepts:
First you need to identify your risk threshold. What do I mean by that? Any business, either your own or one that is franchised, comes with risk. But how much risk are you comfortable with? Generally if you want less risk you may choose a brand that has been established for a long time, but if you are more inclined to take a chance you may choose a newer brand. Established brands have been doing things for a long time, they have a really good idea of what works and doesn’t. They are also less likely to make changes and go with the flow. The theory if it ain’t broken don’t fix it. A newer brand will have less of this knowledge, is generally trying to be more innovative, and is willing to take risks to change the landscape. Regardless of size or tenure, what are the franchise brands doing? Trying to be like the brands who have been around awhile, staying true to their original concept or are they adjusting to what is happening? Understanding where you stand on risk will help you narrow down your field of choices. It will also help you decide if you even want to franchise or go your own way.
Do the math. You think this would be one of the first places you would be looking at considering franchising but if you go with the shiny object you may not be crunching the numbers. And I am not referring to up front costs, what are your long term costs. A company may have a low initial investment and you get into it and you realize the longer term royalties are excessive. Also, what has the company been doing historically with costs? Have they always tried to line their own pockets or has it been about what is right for the owners?
Costs are also more than numbers. What will the cost be to your time and energy? What will the cost be to your health? What will the cost be to your family? Make sure you speak to other owners, and not just the ones the franchise company suggests you speak with. Ask questions, dig deeper into how you define costs and what your expectations are short and long term.
What is the history of the company? Even new franchise brands have history. What does it look like? Established franchises may have a greater length of history but it may be a questionable history. What do you want your history to be? Is it being part of a long standing company or is it being part of something new and exciting. Do you want to be a piece of the story or help write it?
Everyone has their #1, this is mine. What kind of culture do you want to be part of? When I was exploring the opportunity to own a franchise I was approached by a national insurance company. I thought this would be a great fit for me, but as I progressed through the process I realized it would be me doing the same things I have always been doing in my career, fitting into someone else’s box. It was my husband who picked up on it first. We always say, Iron Valley Real Estate is not for everyone and it never hurts our feelings if we are not for you. In the end, we want what is best for everyone.
My point is, make sure you choose a brand that aligns with your beliefs and the culture you want to build in your business. Just because a franchise is well established does not mean they fit you. As a matter of fact, depending on how they are evolving, they may be far from what you need. Next week we will wrap this series up. Finishing with some final notes and what is next.