Is a Franchise Right for You?
By Joel Goldstein, Group Marketing Director, MFV Expositions
If you often find yourself daydreaming at your computer thinking of ways to improve your company or even wishing your boss handled projects or situations differently, you’re not alone. Plenty of us are thinking the same thing. What’s not as common is when someone decides to take matters into their own hands and do something about it.
If you’re a motivated person with good ideas and a will to succeed, there’s no reason you shouldn’t be your own boss. Making the leap from the corporate world to owning your own business may seem a bit daunting, but that’s where the opportunity to join an established franchise comes into play. A franchise can be the perfect bridge to entrepreneurialism.
Is a Franchise Right for You?
Like many things, it depends. The sheer number of franchise opportunities may seem daunting, but you’ll be able eliminate over half – most likely because they just don’t fit your personal style and goals.
When getting started, it may seem like a good idea to look at different brands – but what you need to do is look at the different types of businesses available. Think with your head, not your heart. This should not be an emotional decision.
Owning a retail store may seem exciting to you, but does it match your goals, skill sets, and risk tolerance? You enjoyed that delicious sandwich at a franchise location recently and now you’re thinking, “I could own one of the restaurants.” Food franchises are great for some people but typically employ many workers, require a large upfront investment, and characteristically mean long hours.
Different types of franchises feature different requirements – some more flexible than others. Most people don’t realize the array of franchises offered until the serious research starts. Look for a franchise that can integrate your skills and goals.
And while you’re narrowing down options, don’t eliminate something from your list without reasonably thinking it through—past your initial impressions. There are so many small business owners and franchisees out there doing something that probably wasn’t what they thought they’d be doing.
Some very careful self-analysis is important before buying a franchise. Indeed, your personal house should be in good order. One of the myths that have been perpetuated is that franchise ownership is easy. This is just simply not the case! While the franchise system provides startup training and ongoing support, you, as the franchisee, you must be prepared to manage the business. You must be willing to work harder than you have perhaps ever worked before.
Forty-hour weeks are also a myth, particularly in the startup phase of the business. It is more like 60-to-70-hour weeks. You must also be willing to mop floors, empty trash, and fire as well as hire employees and deal with upset customers.
Ultimately, you need the money to invest in the business. A major cause of business failure is under capitalization. While the franchisor often gives you a good idea of the startup costs, typically these will vary depending on the situation. You will need enough money to not only open your franchise, but run it until it is profitable. For some franchises, that may take a year. Remember, it is better to start out with more money than you think you will need rather than less.
There are numerous websites showcasing franchise businesses available and the internet offers a wealth of information on franchising – good and bad. There are franchise events nearby which offer a one-stop shop to evaluate and compare different brands, get educated, and meet representatives in-person. No matter how you go about deciding which business to buy: read everything you can and when you’re ready to be your own boss, you’ll have the knowledge you need to make the most informed decision.
Being in business for your self can be quite rewarding. And a franchise may be right for you. According to International Franchise Association’s updated 2012 forecast, prepared by IHS Global Insight:
- The number of franchise establishments in the United States will increase by 1.5 % in 2012 to 747,069 or 10,955 new businesses. It is the first time since 2008 the industry will add new units.
- Direct employment in franchise establishments will increase by 2.1% in 2012, from 7.9 million to 8.1 million, or 167,000 new jobs. This growth compares to 150,000 new jobs in 2011. The rate of job growth compares favorably to the overall private sector, with an estimate of only 1.8 % in 2012.
- The economic output of franchise establishments is projected to show a 5.2% increase in 2012. Output of the franchising industry will increase by $39 billion in 2012 compared to a $35 billion gain in 2011.
Joel Goldstein is the Group Marketing Director at MFV Expositions, the leading producer of franchise events worldwide. MFV Expositions is producing the International Franchise Expo in New York City June 20-22, 2013.
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The views, opinions, or expressions provided by Joel Goldstein do not necessarily represent the views, opinions, or expressions of the City of New York, the New York City Department of Small Business Services, and/or NYC Business Solutions.