Starting a business can be an overwhelming undertaking. Often it can seem that opting for a franchise can be the easiest route to owning your own business. While there are definitely perks to being a part of a franchise, there are several factors that are often overlooked when evaluating whether or not to buy into a specific franchise. Following are a few examples.
Do You Love the Business?
The whole point of starting and owning your own business is to be able to make money while you do something you love. When examining a specific franchise opportunity, consider if it is something you will truly love to do. Even if it is something you considered doing on your own anyway, there may be factors involved with the franchise that will make it less enjoyable for you. One example is an ice cream parlor or a cupcake shop. If part of the fun for you is making up your own recipes, and the franchise requires you use franchise recipes, you may not really be getting what you want with the franchise.
Is There a Market?
No matter how successful a franchise may seem to be, there has to be a market in the specific location in which you would open your business. Do not assume it will be the same everywhere. Culture, population, and competition all play a role. If there is no market demand in your area, the business could fail no matter how successful the franchise as a whole is.
Does the Flexibility and Freedom Meet Your Preference?
Different entrepreneurs have different ideas about what it means to run their own business. Franchises often offer business owners only limited freedom and flexibility in decision making. Be certain you research what the franchise you are considering offers in this area, and consider whether or not you are okay with the level of freedom you will have when it comes to making decisions.
Does the Potential for Earnings Match Your Needs?
You know what you need to make to survive and what you need to make to profit. Franchise fees can often be very steep, so examine what the true earnings potential is before taking the leap to ensure you even stand a chance of making what you need or want to make if the business is a success.
What Does it Really Cost?
This goes right along with determining true earnings potential. Be on the lookout for hidden costs such as required training that must be paid for out-of-pocket or additional required marketing fees. These can add up, and sometimes they can mean a specific opportunity simply does not meet the needs of a specific entrepreneur. Financing can be different as well. Consider if the business loan rates for franchises differ from those for other types of business, what franchise loans are available, and if there is the potential for other types of business financing.
Franchises can be a great option for those looking to start their own business, but these factors are overlooked at times. These are things that should definitely be considered before making a decision.
This article was submitted by Faith Stewart. Faith Stewart has a BBA with a major in accounting and spent 10 years working in the various aspects of accounting and finance before pursuing her passion for writing.