5 Tips to ensure your happiness as a franchisee
Whatever your reason for starting a business, investing in a franchise opportunity offers some fantastic potential benefits. A franchise with an established reputation should be a recipe for success, and the franchisor will usually provide training and support to you. You’ll enjoy the independence of running a small business with the advantages of also being part of an established business.
Certainly, franchise business in the United States is big business. According to Statista (2019):
- There are 773,603 franchise businesses
- U.S. franchise businesses turnover around $788 billion
- Franchises employed 8.43 million people in the United States
Most franchisees are happy in their business A quarterly survey by Vistaprint concluded that ‘the vast majority of micro business owners are optimistic about running their own businesses, with 78 percent reporting that they are either happy or very happy.’
But what about the other 22%. Aren’t they happy?
Franchising is a successful business model
If franchising were not a great business model – especially for first-time business owners – there wouldn’t be 773,603 franchise businesses in the United States. If you get it right, your profits and earnings potential is tremendous.
We do, however, believe that most of the unhappy franchisees are unhappy because they went into a deal with tunnel vision.
To help you see the bigger picture and avoid investing in a franchise that will make you unhappy, we’ve put together this list of the top five mistakes that prospective franchisees make.
1. Not understanding what being a boss means
So, you’re a great mechanic, or chef, or painter. Maybe you’ve always had a flair for fashion, or you love looking after kids. While it’s great to do what you love and are good at in business, as a franchisee you also become a boss. The buck stops with you, and from HR, to training and development, to advertising, and tax, you will be responsible for your business.
Of course, you’ll get a lot of support from the franchisor. This doesn’t mean you’re not in charge of your own destiny. You are, but you’ll have the added advantage of the guiderails set by the franchisor – stay within these, and you’ll have the greatest chance of being successful. After all, you don’t join the military to do your own thing, and you won’t last long as a maverick franchisee.
2. You believe that the more money you invest, the bigger your profits will be
Owning a franchise has many similarities to owning other businesses. One of these is that the first few years are usually the toughest. Your profits are likely to grow as you find your feet and build some momentum in your business.
Just because you invest a million dollars does not mean you will make more money than the franchisee who invests a hundred grand. Indeed, most of the money you invest to start a business goes into funding the build out, products, and equipment needed by your business.
The amount of money you can make depends upon your business structure and how you run it – it is never a simple equation linked solely to how much you invest.
3. You buy into a business you love as a consumer
Who doesn’t love to stop off at their local sandwich shop or café for a treat? And whenever you stand in line to be served, you’re amazed at just how many people they are serving. It’s got to be a great business to own, right? And so, when you decide to invest in a franchise, you go straight to that business. There really is no need to look elsewhere, is there?
A rookie mistake is not casting your net wider. See what’s out there. The important thing is to match your skillset to owning a business.
Buying that sandwich shop might be the best move for you, but you should never let your personal consumer preferences blind you from considering other franchise opportunities – you could miss out on a real cracker of a deal. A deal that ensures you’re happy at work and enjoy the work/life balance you crave.
4. You don’t do your own due diligence
Now, we’re not saying that franchisors would lie to you about their business or the business of an existing franchise, but it is in their interest to paint the rosiest picture they can. Like a real estate agent selling you a home. Would you buy that home without having a survey completed?
It’s critical that you do your own research. Carry out your due diligence to make sure that the opportunity is all that the franchisor says it is. You’ll need to speak to people, crunch the numbers, and ascertain viability of the business. Never rely solely on the franchisor’s numbers.
5. You don’t consider your long-term goals
Being a business owner is kind of romantic. That is, until you realize all the hard work that goes into creating long-term entrepreneurial success.
Before investing in a franchise, you must consider if it fits in with your long-term goals. You may want to move to another state in five years, to be near parents, children, or grandchildren. Perhaps you want to spend more time doing things you love to do now, instead of waiting for retirement.
Take time out to sit down and consider if a franchise opportunity really fits in with your longer-term personal and financial goals. If you don’t do this, you’re more likely to eventually become an unhappy franchisee.
Don’t become the next unhappy franchisee
If you can avoid the five common mistakes we’ve outlined above, you’ll have more chance of creating a successful business that will sustain your desired lifestyle. Of course, there are no guarantees, but you should avoid becoming the next unhappy franchisee by:
- Understanding what it means to go into business
- Ensuring the franchise is a financially sound investment
- Being certain that the franchise helps you to achieve your long-term goals
- Matching your skillsets to the business opportunity available
We’ve never yet met a prospective franchisee who can cover all the bases without help. As one of our clients (Roger H.) says about working with us:
“Brian is an excellent advisor for someone considering their own business. Is owning/running your own business right for you? What business would be the right fit? He brings a wealth of information and options and it’s been a pleasure to refer interested clients to him.”
Your franchise success depends upon the help and advice you receive. Book a 30-minute free consultation, and let’s get the ball rolling.