Years ago, I purchased a well-known janitorial franchise. My dad attempted to talk me out of it, but I did it anyway. In hindsight, a thorough review of the pros and cons of buying a franchise were critical.
After passing my hat around to family and friends, I had the cash needed. Promptly prancing my way to the franchisor’s office to make things official. I was ready to become a millionaire.
Choosing a franchise path to riches can have awesome results. You may be able to secure other locations or territories. Multiplying your financial goals exponentially.
Do a poor vetting job, and you could lose a bucket of cash and time. So, let’s dive into the pros and cons of franchising right now.
1. Get educated
You know what the franchise sells. But what does the market think of it? And what are the long-term projections for sustained growth? A franchise that’s hot this year, but lacks a scalable future, should be avoided.
Sure, it’s a great idea if you already have experience in the field. But that’s not mandatory for success. Is it an industry that you can quickly and thoroughly become an expert in?
Great biz concepts don’t happen by chance. Rather lots of sweat equity. Can your small business idea grow into something substantial? Does your service or product have room to grow and develop?
Popular franchises have been vetted. They have teams of experts with deep subject knowledge. Why not tap that instead?
2. Show me the money
With the janitorial franchise I mentioned I had to purchase supplies, maintain insurance, and accounting through them. Not to mention the never-ending royalty fee that had to be paid.
Yes, I had immediate name recognition when I knocked on doors. But as my dad would say, “You’ve still got to knock.” His point, can it really make a difference if it was my independent janitorial business vs a franchise?
Well, I made zero profit in two years of franchise ownership. I started a cleaning business on my own and found myself with tens of thousands in my checking account within months.
“I feed truck drivers, millionaires all at the same table. Colonel Sanders
3. Proven system
Franchises like Steak ‘n Shake and Chick-fil-A are famously known for low entry cost. This is a good thing. And at nearly $300 billion dollars in revenue, they’re doing something right.
Going into business is not without risk. And to help prevent business failure many entrepreneurs turn to the system of franchising. It’s tried, tested, and can be duplicated.
Yes, you may have to follow certain guidelines and maintain a strict corporate posture. But you have the support of many.
Jumping out on your own can be exciting and profitable. But the learning curve can be step and unforgiving. Those that want to take a risk, albeit a calculated one, might do better with a franchise direction. But if you like to do your own thing franchising may be a deal breaker.
4. Choose passion or profits
There will be many long days and nights with your new franchising venture. And a good cushion to handle the stress is a deep-seeded passion for what you’re doing.
Yes, you must make a profit. But making this a lower priority will make all your other efforts to make your franchise success easier.
Tackling daily responsibilities as mundane as bad reviews are more tolerable with an authentic passion for what you are doing. In choosing to go the franchise route or not, have you been honest with yourself? Are you only looking at potential profits, or do you really want to be a part of the business?
5. Research the franchise
Of course, you will research the franchise online. You’ll read reviews and check their website completely. You may already use their product or service. But what else should you do?
Have a sit down with a current franchise owner for starters. What are the pros and cons of working with these guys? What is management support like? When will you make a profit? What’s the marketing spend like? Best source for good employees?
A visit to their corporate office is another key in your research. What vibe do you get? Does their branded persona match what you see in real time?
In the end, choosing to franchise or not depends on what goals you have for yourself, honesty, and meticulous research.