Steps to Opening a Franchise: Do You Have What it Takes?

Starting a franchise business is not easy. It involves extensive research to decide which business is right for you, then in-depth planning before going live. Though the beginning stages can be rough, the rewards for perseverance are well worth it. And in our current economy, these rewards may just materialize sooner than expected.

There are two major steps that need to be taken before opening a franchise:

Evaluations

Before you decide which franchise business to choose, you need to evaluate several different areas, such as:

Personal: What is your education and professional background? What types of experiences do you think would be applicable to your new business? How would you rate your risk tolerance? Are you willing to take big risks for potentially large payoffs, or do you prefer to play it safe? Are you a “big picture” person, or are you more detail-oriented?

Family: Your family life will play a major role in the success of your business. For example, if you are single, you likely have more free time to devote to a franchise venture. On the other hand, if you have a spouse and family, you need to make sure they’re on board and buy into the vision. Otherwise, you could be in for a bumpy ride.

Business Preference: Do you prefer an established and structured business model, or do you like to go it alone? Are you willing to invest in a business plan that can accelerate your success, or would you prefer to blaze your own trail through trial and error? Franchising is a great way to start a business, but it’s not for everyone. Some individuals want more flexibility in how they run their business and/or they have less capital to invest. In such cases, starting a business from scratch might be a better option.

Market Analysis: Who will your target market be? What is the level of competition in your local market? Does this business have a good chance of succeeding in the local market?

Franchisor Track Record: Not all franchises are created equal. Some offer more support than others, and some have more successful franchisees. Speak with existing franchisees to find out the pros and cons of each franchise brand you are looking at.

Resources: Do you have the available funds to invest in the franchise you are considering? If not, can you obtain the funding through family, friends, banks, or alternative lending sources?

Due Diligence

These days, there are hundreds of franchise brands to choose from across a wide range of industries. Of course, there are numerous in traditional industries such as food and cleaning services, but there are also up and coming industries such as senior care, where you can start a business for far lower overhead and take advantage of the largest demographic shift in modern history. There are even franchises for sales professionals who want to become entrepreneurs and finally earn what they’re really worth. You can deal with each franchise brand individually, but that would take hours of back and forth with sales reps whose job it is to convince you that theirs is the best franchise opportunity.

Unless you already have your mind set on just one or two franchises or you have plenty of time to deal with numerous franchisor reps, your best bet is to work with a franchise consultant. At National Franchise Business Solutions, we have access to over 600 franchise brands from virtually every industry, and through a multi-step process, we work closely with candidates to match them with the franchisor that best suits their passion, skills, and budget. Our advice is objective, and our consulting is free and unlimited. We have no pre-set agenda, except to help put you on the path to realizing your own entrepreneurial dream.

 

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Franchising vs. Starting a Business from Scratch

Starting any business requires a tremendous amount of decision-making. One common dilemma Starting a Businesspeople face is whether to go with the franchising route or to start a business from scratch. It is a serious consideration, since your decision could ultimately lead to the success or failure of your new business.

The answer to this question depends largely on your business goals; whether you’re offering a product or service, and overall commitment and investment you’re willing to make. There are pros and cons to both options, which is why it’s important to weigh your options carefully before making a decision.

When to Choose Franchising

Franchising is a turnkey business, which removes all the guess work and trial-and-errors from setting up and running your brand-new business. In general, a franchise is best for people with:

  • Extra money beyond initial investment – When you find a franchise, you’re going to pay the initial franchise fee upfront. Then once operation begins, you’ll still have to set aside payment for ongoing franchise royalties.
  • No business background – Most franchisors assist franchisees with everything from finding a location, training the staff, providing suppliers, setting up the store, and even marketing your products. For those without a business background, this is a huge help.
  • No control issues – Franchising doesn’t offer franchisees much control over the business model, product offering and branding. If you want any aspect of the business changed, you’d have to seek approval from the franchisor.

If you choose this route, you must be ready for risks attached to franchising. For example, bad press from another branch, even if it is worlds away from your franchise location, could affect sales of your business negatively.

When to Choose a Startup

Building a business from scratch involves a plethora of steps, from market research to product sourcing or manufacturing, marketing and branding, training employees, inventory, and a whole lot more. The main advantage of going this route is that you’ll receive 100% of sales and have total control every step of the way. This method is ideal for people who are:

  • Risk-takers – Franchising requires a franchisee to take a risk once when signing the franchise contract, and then have to work on the entire business all the way through. When you’re starting a business from scratch, you’ll be faced with a lot of decisions wherein you’d have to consider the risks and benefits of every option. And because you’ll have plenty of trial-and-errors operating a business without a proven system, it could be costly in terms of finances, time and effort.
  • Hands-on – The majority of businesses that start from scratch and have reached success are led by owners who are hands-on. You’ll need to be front and center every step of the way.
  • Easy to adapt – Change is inevitable at the start of every business. You’ll have to change what doesn’t work and adapt quickly to avoid losses.

The risks of this route are plenty, but building a business with total control can be challenging, yet fulfilling.

Whichever route you take, it is important to perform market research and see if the franchise or business idea would work within your geographic location and target audience. It’s also best to seek advice from professionals who could guide you with the important aspects of starting a business.

At National Franchise Business Solutions, we take an object and even-handed approach to helping entrepreneurs get into a business they will be successful with. We work with over 600 franchise brands across a wide range of industries, and through a multi-step process, we are able to help you identify the business model that best fits your passion, skills, and budget. And if you find that franchising is not right for you and you would rather start a business from scratch or retain the security of working for someone else, that’s perfectly fine too. We’re here to help you in any way we can so you can find the business or career that best fits your passion, skills, and budget.

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