For people who want ownership in a business but don't want to start from the ground up by creating a new company, buying into a franchise can be a perfect solution. The business plans are already drawn up, the advertising strategy is set and a loyal fan base already exists. It allows for the freedom of owning a business without the risks of starting from scratch.
There is still a lot of work to be done when joining a franchise branch, however, and it starts with deciding which company is the right one to buy.
"Time and money are the two biggest factors."
Can the buyer keep the business running?
The first thing new franchise buyers need to consider is the feasibility of getting a new business location up and running, according to the International Franchising Association. Time and money are the two biggest factors when choosing a franchise. If the buyer doesn't have the time or funding to successfully run a business, all the other elements are irrelevant.
The Wall Street Journal reported that location is another critical consideration to make. In a town that's already oversaturated with burger joints, trying to put another fast food restaurant on the corner could threaten the franchisee's success.
Is the industry the right fit?
Understanding the supply and demand in an area helps potential buyers narrow down which kind of industry they want to join. To refine the options further down to a specific company, they need to look at the training and management styles of the franchisors they meet with. Will the franchisees be supported enough in their early days? Is there a significant personality or cultural clash with the owner? These are important things to take into account before doing business with someone.
Finally, franchisees should be interested in the business they are buying, and should hopefully already have some kind of knowledge about that industry. There's already enough work in launching a franchise without adding the stress of learning what the product even is, or worse, finding out it's a product the buyer doesn't even like.
Equipment and franchise industry piece brought to you by Marlin Equipment Finance, a nationwide provider of commercial lending solutions for small and mid-size businesses. Marlin's equipment financing and loan products are offered directly to businesses, and through third party vendor programs, which include manufacturers, distributors, independent dealers and brokers in the security, food services, healthcare, information technology, office technology and telecommunications sectors.