A lot of pros come along with starting your own franchise business.
For one, there is the appeal of being your own boss. Plus, you’re getting support from a parent company or fellow franchisees to make sure you’re going to be successful.
However, a lot more goes into it.
Before jumping into anything, it’s important to do your research to make sure that the franchise you’re picking is the right one for you.
Investing In A Franchise Opportunity: Do You Have The Passion?
Stearns Bank's Robin Studniski said there has to be a certain level of passion in those wanting to start a franchise.
“The owner needs to be objective and know what they want to accomplish before anything really starts,” Robin said. “Passion plays a huge part in this. If it’s something you’re doing just to make money and then want it to go away quickly, then it may not go as planned.”
“If they’re vested in it at a different level, it will really show and they will do anything it takes to make the business succeed.”
Owning A Franchise: How Much Time Are You Willing To Commit?
Stearns Bank SBA lender Jeremy Goltz stresses that it’s also important to know how much time and effort it takes to start a franchise business. The owner should know the size of the commitment they’re going to have to invest in the business to make it prosper.
“It’s important to figure out, right away, how much involvement from them there will be,” Jeremy said. “Are they going to be the owner and operator, or an absentee owner? That’s where the research end comes into it. Interviewing the franchisor or researching the franchise to find out what goes on day-to-day is key in understanding what’s right for you.”
Both Robin and Jeremy do their own thorough research during the SBA loan approval process.
But it’s even more important for the business owner to research the franchise and its Franchise Disclosure Document (FDD). If someone is uninformed going into a meeting with a lender, they’re not likely to be approved.
5 Questions To Ask Before Selecting A Business Franchise
Other key questions business owners should ask themselves before choosing a franchise include:
- What are my personal goals?
- What is my investment goal?
- What budget do I need to start the franchise?
- Do I have a strong support system in place?
- Do my lifestyle and skill set suit the franchise business model?
Starting A Franchise: Understand The Risks
Many franchises have ebbs and flows in profitability. You may be profitable when you open in the summer, but see a downturn when the weather turns cold in the winter.
“You might not make the money you thought you might in the first year,” Jeremy said. “As a business owner, you need to be able to handle ups and downs of your income. If everybody knew you could make money with starting a franchise, then everybody would be doing it. It’s just not the case.”
Having a Plan B in place after starting a franchise is always a good idea.
“Things don’t always go as planned,” Robin said. “That’s the nature of this. Sometimes we have to have hard conversations with people. We need to have that backup plan in place, just in case, to make sure we can keep the doors open for the business.
“There are a lot of parts to the process.”
Take The Next Step