At Astreem, we meet people from all walks of life seeking business opportunities either to start a new career, become one's own boss, have more flexible work hours or just simply a change of lifestyle. With so many franchise opportunities out there, how do you know which franchise works for you? How do you, as a brand new franchisee, know what type of franchise suits best for your investment quantum, previous experience, future earning expectations as well as lifestyle choices?
Franchise offering aside, some fundamental questions to ask yourself are:
- What do you love to do?
- What skills and experience do you have?
- What are you willing to risk, and possibly lose?
- What are you willing to sacrifice to make your new venture succeed?
- How much can you make?
- Do you like the franchisor?
1. Do What You Love
Once you choose a franchise, be prepared to make an all-out commitment to its success, including long hours and sleepless nights. that's where passion comes in. Granted, starting your own franchise business is about making money, but given a choice, where would you rather spend your time: doing something you love or slogging it out day after day at just another job?
2. What Is The Nature Of Skills Gained In Your Past Experience?
Your skills and experience are a key factor in determining the best brand for you. Are you a hands-on person, a doer? Or are you a manager who prefers to delegate? Do you like to work alone or with others as part of a team? Are you prepared to be a leader, telling others what to do and making all the major decisions every day? Can you handle the responsibility of meeting a payroll or having others depend on you each week so they can pay their bills?
3. Consider The Risks And The Potentials
For the most part, many first-time franchisees invest a large part of their life savings in a franchise. As such, failure is not an option. Yet, time and time again, franchisees who take on new opportunities do not budget sufficiently to give them sufficient breathing space to build their franchises from the time they are fledging business units to the time the outlet is able to offer them healthy returns on their investment. A healthy rule of thumb is to ensure your budget has an additional six months worth of budgeted cash flow.
Being prepared offers two things: a prepared mind and planned resources to handle any unforeseen issues that may crop up in the course of managing a business.
4. What Are You Willing To Sacrifice To Become A Franchisee?
With every business sector, different sets of requirements come into play. There are no right or wrong answers, only what works for you. If you like people and want a simple product, a retail franchise may work. If you want weekends and evenings for your family or yourself, consider a business-to-business brand so you can work closer to five days a week instead of 7-day weeks. If you want to be directly engaged with the end consumers, believe that there is nothing like the daily demands of satisfying food cravings, then a F&B franchise that engages you 24/7 may just be for you.
These are trade-offs that sometimes are required to fulfil the higher calling to be your own boss. Ask yourself if your desire to be independent is sufficient to carry you throughout doubt and fear.
5. How Much Can You make?
This often depends on the nature of the franchise you select. However, a large part of it also depends on how much you are willing and able to invest. It also determines whether you need to invest in a single unit franchise, multiple units or even an area or a master franchise for a given territory.
So how much are you able and willing to spend (and risk) to own a franchise? Your investment amount can range from as little as $50,000 to about $500,000 for a single unit franchise and often more than $200,000 for area or master franchise rights. It is also important to ensure there is sufficient capital to finance the operational setup the franchise needs.
Usually, each single outlet will have a range of profitability. If higher profits are desired, it may require an investment of more than one unit.
However, for most first-time franchisees, the investment quantum required and know-how necessary to run an area franchise may be out of reach. To start your journey, it is advisable to get your feet wet first by way of a single unit franchise, making your way towards multiple unit franchise ownership.
6. Do You Like The Franchisor?
Finally, if you are going to be signing a 5-10 year franchise agreement, whether for a single unit or multiple unit, area or master franchise, make sure you like the people you are going to work with. Ensure that your vision and goals are aligned with your prospective franchisor. Make sure that they have proper operating systems you can work with to ensure your success.
Hsien is a Certified Practising Management Consultant and SCOPE-IP consultant with over 20 years of experience in consumer retail industry. She is the founder and Managing Director of Astreem Consulting - a leading Franchise Development firm of the Asia-Pacific region.
Hsien has been an integral catalyst to the growth of numerous SMEs across varying industries via franchising, marketing, branding and intellectual property protection strategies. She has held key top executive positions with some of the region’s most recognized brand names.
Hsien can be reached at firstname.lastname@example.org.