By Skip Reynolds
It is estimated that the franchise industry accounts for 50% of the retail economy in the United States. For the right person, owning a franchise can be extremely rewarding. With over 300 different industry and business categories in existence, franchise businesses in the U.S. alone generate over $2.1 trillion to the economy.
If you are a transitioning veteran, you no doubt are looking for ways to compliment your service retirement income or want to invest money you have saved to build long-term equity that offers greater control of your life as you get older. Many service men and women have retired from their service to country and are still relatively young and want to continue adding value to themselves, their families, and the community.
When making a decision to become a franchise owner, there is a process you must follow to ensure that your investment will create the personal wealth that you envision for yourself. That process requires due diligence and attention to details. There are as many questions you could ask as there are franchise systems out there, and it is important that you find the best franchise system that fits your lifestyle needs, family needs, your likes and dislikes, and certainly your dreams.
WHAT TO LOOK FOR
As you go through the process of vetting franchisors to ensure they meet your criteria, you will be asking many questions of the people who will potentially become your business partners and who provide the system and training you’ll need to run your new business. Any good franchise system will have:
- A proven and successful business process
- A well-known brand
- On-going training
- Strong local, regional, and national advertising
- Multiple unit ownership opportunities
- A strong network of other successful franchisees
- Good field support
These are just a few critical items you will need to ask questions about. The list is endless, and you will need to put on your thinking cap and use a lot of common sense to understand what exactly it is that you will be investing your money in.
This leads to the critical questions you must ask yourself first before you decide to venture into the world of franchise ownership. You must realize that you as the business owner are the critical element to the success of your franchise. The only way you will know that this investment is right for you, is to evaluate yourself first and foremost. Franchise system purchases are contractual, and are often no less than ten-years in duration. The last thing you’ll want to do is invest in something that is not a good fit.
Have you ever worn a pair of boots that were too small or too big and walked 10 to 20 miles? Your feet told you very quickly this was not going to work. Changing boots to the right size and fit is not difficult. Signing a contract to own a franchise system is something you can’t just change out if you realize early on that this wasn’t the right fit.
WHAT TO ASK
Here are 10 critical questions you need to ask yourself when considering franchise ownership. Knowing the answers will assure you that successful ownership is much more likely. Crunching the numbers is important, but franchise ownership is all about you and how you define your future. Knowing that going in will make the other questions of the franchisor that much easier.
- Do you have a goal for your future wealth? Can you honestly describe what the end looks like?
- What is your true passion? Who are you as a person, and why is this important to you?
- Are you looking for economic independence or economic security? What’s the difference in your mind?
- What does it mean to you to be an entrepreneur? The real question is; can you live with and follow a process?
- Franchising is hard work. Are you willing to put all of your energy into making it work?
- You’ve been doing things the same way for many years. Are you open-minded to learn new concepts?
- You’ve been around people for a long time in tight quarters. How well do you really like people?
- Do you have the ability to sell – yourself and your products or service?
- Does your family support your dreams?
- How much can you afford to invest? How much can you afford to lose? How much will you have in reserve?
Generally, a business will not fail because the system doesn’t work, or the product and service is not of sufficient quality. In fact, most small businesses fail in the first year or two for specific reasons. The greatest reason is under capitalization, meaning the business owner has not set aside the appropriate amount of funds to carry them through that first critical year. The second reason is that the business owner has not prepared themselves for the challenges of small business ownership, or they believe they can do it all on their own.
The key for your success is to define who you really are. Your honesty in answering the ten questions outlined is critical. If for example, you like the idea of business ownership but want to do it all on your own, then franchising is probably not the way to go. There is a symbiotic relationship that exists between franchisor and franchisee.
Both parties have a vested interest in each other’s success and requires trust and respect on both sides. The emotions when going through the process are strong, and your decision to move forward will require the ability to ask the tough questions and put your emotions aside. Your passion will tug at you enough, and that is a good thing, because if you don’t feel that tug, franchising will not be for you.
ABOUT THE AUTHOR
Skip Reynolds is a Franchise Professional Advisor & Coach for Franchise Biz Experts, LLC. He has been both an employee of a franchisor (Director for a major franchisor providing consultation to 100 franchisees in seven states), as well as a franchise owner. Skip is a certified instructor in leadership development and has trained people from all levels of various organizations, including line managers, senior executives, and business owners in leadership, interpersonal skills, and communications. Skip served on Active and Reserve duty with the United States Navy in the late 1960’s and early 1970’s, participating in ‘Cold-War’ activities in the Western Pacific.