Franchising isn't for everybody. It involves particular mind-set and attitudes, like willingness to work to someone else's system. It also requires a degree of management ability.What many franchisors are looking for is the ability to run their outlets - not an understanding of the 'technical' aspects of their business. For some franchisors, for example fast-food outlets, prior experience is seen as a major disadvantage for someone taking on a franchise.
You therefore need to figure out if you want to take on a franchise - and whether you are able to do it.
Here are some questions which will help you to decide whether franchising is the right way into self-employment for you. Some of these questions will involve discussing the idea with your partner and working out your financial position.
Question 1
Is your physical health good? Have you had any problem that would prevent you obtaining a life assurance policy, for example?
Comment
If you are not in good health then franchising is not for you.
Question 2
What proportion of your assets would you be willing to risk in a franchise? Calculate the value of your assets including savings, redundancy pay, car, house etc.
Comment
You will of course have to invest quite a lot of your own capital in the venture. You should realise that this will be unprotected and that if you invest all, there is a chance you could equally well lose all. Examine the implications of this carefully and decide whether the investment you will need to make could leave you over-exposed.
Question 3
Calculate the financial commitments you have at present - mortgage, rates, etc. Could you afford the drop in income that usually occurs in the early life of a new business?
Comment
During the early months of new business cash flow problems may result in income from the business being lower than expected. Are your financial commitments such that you could manage on less income than you have now?
Question 4
Do you think your partner will be willing to give you full support? There are always problems and difficult periods even in a successful franchise, and it is during these times that you may need a bit more family support than usual
Question 5
Is your partner aware of and happy to share the risks involved? Having discussed the franchise idea with your partner, ask him/her to make a list of their concerns and worries.
Question 6
How do you think your partner would react to the disruption to the family life that starting a new business entails? This disruption could range from a few missed meals to the abandonment of an annual holiday and the working of long hours. Ask them for reactions to these possibilities.
Comment
Questions 4, 5 and 6 have been asked because of the importance of family support. You should of course have discussed the franchise idea fully with your partner. Many franchisors positively encourage the involvement of spouses or partners in their discussions with franchisees. But you should also ask yourself whether your relationship would stand the strain of the sacrifices, which are inevitably involved in starting your own business. Be sure your partner is not going along with your ideas just to make you happy; make sure he or she is as committed as you are.
Question 7
How many extra hours above a standard 40 hour week would you be prepared to work as a franchisee?
Comment
As you will be aware, running a franchise could involve you in much more than a 9.00am to 5.00pm, weekday job. You may have said that you would be willing to work 20 or more hours extra. Is this realistic - what would you give up in a week to work those extra hours? If you said 2 or 3 hours or more, do you really have the commitment necessary to succeed in a new venture? It is your business and you will be responsible for all your decisions you have to spend all of the hours necessary to make the business work.
Question 8
What reaction would you have to receiving strict guidelines by the franchisor on how to run your business?
Comment
If you value a high degree of autonomy and want to make your own decisions on how to run and develop business, then franchising is possibly not for you. The franchisor is in ultimate control and resentment of this in your part will make the relationship very difficult.
Question 9
What involvement would you expect from the franchisor in resolving problems encountered in running the franchise?
Comment
Although the franchisor should help you with certain types of problems, do not expect assistance with all your minor difficulties. If you expect a large degree of assistance you should choose a franchise very carefully, selecting one which is well established and with well-defined systems for operating the business.
Question 10
If you see improvements could be made to the environment in which you work, how determined would you be to change them for the better?
Comment
In running a franchise, you will be expected to go by the rules, not change them. A franchisor will object vigorously if you try to 'personalise' the business. If you will be unable to resist making changes, then think again?
Question 11
What would be your reaction to do tasks, such as serving food or cleaning tables?
Comment
You may need to do a lot of the dirty work yourself, particularly in the early days. If you don't want to get involved, make sure that profit margins are sufficiently high to enable you to take on staff.
Question 12
In your present employment are you used to taking financial decisions?
Comment
The franchisor will be concerned if you have had little or no financial experience. Are you convinced that you have the necessary financial skills and knowledge?
Question 13
Do you think you have the talent and skills that is required to market and sell your service or product?
Comment
Similarly, are you capable of selling and marketing your business? Are you sufficiently creative? A franchisor will be reassured if you have had some experience.
Question 14
How good do you think you are at motivating staff?
Comment
If you have had problems with staff in the past and have blamed them, are you sure the problems were with the staff and not in the way that you dealt with them? Again, some franchisors may be concerned if you have had no experience of staff management.
Question 15
Have you had frequent changes in jobs?
Comment
If the answer to this question is yes, are you sure that franchising is something you really want to commit yourself to and that you aren't just looking for yet another change? On the other hand, if you haven't moved jobs a few times in your career, are you sure that you are suited to the different lifestyle, which you may face?
Question 16
What are your feelings on job security? Some people like a lot of job security, whilst for others this is not important.
Comment
Think carefully if you don't like insecurity, are you prepared to give up the comfort of receiving a regular salary cheque.
Question 17
Can you deal with stressful situations?
Comment
Running your own business can be very stressful, you must be able to deal with stressful situations that occur on a regular basis.
Question 18
What do you think can go wrong with you buying a franchise? List all the things you can think of that can go wrong together with all the effects that running one would have on your personal and family life.
Comment
A short list will probably indicate that you have thought the issues through properly. You should have a long list which may, in the end, make you reconsider yourself as a potential franchisee.
Source: whichfrancise.com
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