As franchise consultants, we are asked the question every day, “Which franchise is right for me?” And we have one response for everyone, no matter their business experience, how much they have to invest or what their goals are, and that answer is, “It depends.”
When working with someone who wants to find a franchise that is right for them, we first ask them a few questions to get a better feel for what they desire from the business.
What is your reason from wanting to start a business?
We hear answers that range from “To be my own boss,” to “Have something to pass to my children.” The reason why is a strong indicator of the type of franchise that will fit. While all franchises allow you to be your own boss, not all are suited to pass along to your kids. Knowing why you want to own a franchise is important to selecting the right choice.
What is your time frame to start?
The targeting time frame that most franchisors would like to see their potential franchisees beginning their business is usually within 2-3 months after they have made initial contact. If your time horizon is longer, say up to a year, then it’s possible that territory availability may not be available at that future date, and many franchisors will not “hold” the spot. So you would need to find the right franchise that can work with your plan.
How much capital do you have to put towards a business?
This question is has the most impact on choosing the right franchise. You need to know what your financials are before heading into the franchise search. The answer can be split between two confusing terms, “Liquid Capital” and “Total Investment.” Liquid capital is the cash you have available that is not “tied up” in any way. That would be savings, non-retirement investments or cash. When looking at the total investment of a franchise, that is the estimated amount of capital needed to get the franchise up and running. This amount includes franchise fee, real estate, build out, equipment, licenses, software, training, inventory, payroll reserves and three to six months of operating capital. Just to name a few. The difference between your liquid capital and total investment will need to be made up by you, either with loans, leasing programs or landlord concessions. Finding the right franchise that meets your financial needs is crucial.
The answers to these questions help us determine which franchise business would be a good match for you. By taking the time and partnering with one of our franchise consultants, you’ll be able to make an informed and thoughtful decision when looking for the right franchise.
