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Is Franchising Right For You?

How do you know if franchising is right for you? Find out by exploring key factors and questions to consider.
Image of little business buildings printed on blocks next to each other. (Is Franchising Right for You? - Guidant Blog)

When you think of franchising, you may think of a couple of the big ones: McDonald’s and Subway. But did you know you can franchise all types of businesses? There are plenty of franchise options ranging across industries and startup costs. The pivotal question to ask yourself is: does franchising suit your lifestyle and financial objectives? How do you decide if it’s the right avenue for you?

The world of franchising for business owners is vast and encompasses food and beverage, retail, and business services. The allure of franchising as a pathway to business ownership for entrepreneurs involves built-in support systems, established brand recognition, and proven business models that can mitigate risks associated with starting a new venture. Cautions include financial responsibilities, contractual obligations, and management style.

While franchise ownership has many benefits, you should consider all the angles and franchise options before taking the next step. Some people believe franchising is easy — but no business is easy. You’re still managing a business with the franchise model and will need to be hands-on running it, from financials to employee staffing.

If you’re not sure franchising is the right fit for you, keep reading for the key factors to consider before diving into franchising. Here we go:

5 Questions to Ask Yourself Before Franchising

Person selecting the word "Franchise." (Is Franchising Right For You? - Guidant Blog).

According to the International Franchise Association, it’s critical to ask yourself a few key questions to determine your franchising fit. These include:

  1. Is this something I will enjoy? Don’t just purchase a franchise because of its tagline or known brand. Just as if it was a business you were starting from scratch, you want your head and heart invested — and not just financially. In fact, when you start a franchise, plan on picking something that you could see yourself enjoying for ten years.
  2. Do I thrive with consistency and guidelines? Franchises come with product or service consistency. For example, all footlong subs at Subway are, well, a foot long. You can’t just go and change them to eight inches. You’ll be following a system that is set up by the parent corporation, or franchise business, so ensure you are someone who likes guidelines and is willing to follow them. If you’re an entrepreneur with wild and wacky ideas and you can’t be confined by the constraints of consistency and rules, then a franchise would be a dangerous endeavor for you.
  3. How are my finances today? First, your personal financial situation should be in order before you consider purchasing a franchise. If you’re considering financing for your franchise, Guidant Financial can help with that. With a franchise, you should be able to see the startup costs on websites like franchise.com, but know the costs could vary.
  4. Is the franchise successful now? Of course you want to be one of the successful franchisees, so that means the company that is franchising needs to be in good financial standing. You can investigate the business and its profitability over the last several years in a disclosure document for the franchise. Look at the length of time it’s been in business as well as how financially successful it’s been year-over-year. Another important factor to consider before starting a franchise is the current success of the franchise company. It is crucial to investigate the business and its profitability over the last several years.

    Take a close look at the length of time the franchise has been in business. A well-established franchised business with a proven track record is often a safer bet than a newer franchise with a limited history. However, keep in mind that past success is not always a guarantee of future success. Market conditions and other external factors can impact the performance of the franchise.
  5. How supported will I be? Many times, you’ll work more than a 40-hour work week in getting a franchise up and running — even with the franchisor’s support. That’s why it’s important to have a support system not only within the franchise, but also in your personal life.

Biggest Benefits of Franchising

Graphic showing franchise buildings growing on a chart next to a hand holding a light bulb. (Is Franchising Right For You? - Guidant Blog).

After you’ve asked yourself those questions, let’s take a look at the benefits of franchising:

  • Enjoy an established brand — and the marketing to go with it. When you purchase a franchise, whether it’s Wild Birds Unlimited or Minuteman Press, you are purchasing the name and branding too. You don’t need to start from scratch to make your customers aware of your business – they likely have already heard of you. And you generally gain access to a toolkit of marketing and advertising support that makes it easy to get started with your branch. For many larger brands, you’ll even get TV or radio commercials.
  • Take advantage of training. Some franchises offer in-person training at corporate headquarters while others may offer virtual training options. All of your employees will get trained, and that includes new hires. For instance, if your business uses a point-of-sale software system, everyone will be trained on that — and in a manner consistent with the other franchises.
  • Find financing easier. Some franchise fees can be rather expensive – even reaching the $1 million dollar price tag. However, the Small Business Administration offers financing for some specific franchises. Guidant also offers franchising financing, as well.

Franchising Considerations to Contemplate

Just because the benefits are big doesn’t mean there aren’t a few considerations to keep in mind. Here are a few to get you started:

  • Investigate initial investment costs. With financing, the initial investment cost can be quite costly. In fact, up to a million dollars is not unheard of in franchising initial investments. So, make sure you’re someone who has the security of a large savings account and can find financing quickly and relatively easily.
  • Watch for ongoing fees. Similar to initial investment costs, ongoing fees can be part of a franchise. You’re paying the franchisor these fees to use their name and overall business system, or structure. These are often called royalty fees, and they’ll be listed in the franchise documentation when you do your due diligence.
  • Consider contractual obligations. Look for the franchise agreement or disclosure document when you’re investigating a franchise. Pay attention to the fine print; or better yet, hire an attorney to glean the particulars of the contract for you. This is a time when spending a little extra money can be a smart option to make sure you don’t get in over your head.

Getting a Feeling for Franchising

Before you get started purchasing a franchise and becoming one of the prospective franchisees of a parent company, be sure to do your own research about franchising, too, and seek advice from industry experts. Check the track record of the franchise you’re interested in, and make sure your finances are in fine form. From there, you can weigh the pros and cons of different opportunities to make an informed decision about whether franchising is the right fit for you. If so, you could soon be a proud franchise owner!

If you’re ready to take the next step and purchase or start a franchise, Guidant Financial can help with your funding. Guidant simplifies the process by offering specialized financing solutions tailored to franchising. Whether you’re looking to invest in emerging concepts or established brands, Guidant collaborates with thousands of franchises, ensuring you find the ideal match for your entrepreneurial ambitions. Ready to take the next step toward owning a franchise? Get started now with franchise financing.

Call us today at 425-289-3200 for a free, no-pressure business consultation to get started — or pre-qualify in minutes for business financing now!

“When Falling Sky Brewing presented itself as a great opportunity for me, I needed the capital. Traditional lenders weren’t going to do it. I took a chance on myself that I could grow my business and my 401(k)… And I thought, ‘You know what? I could do this without overhanging debt.‘”

Stephen Such, Falling Sky Brewing

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