In order to decide which alternative (franchise vs. standalone startup) is the
wisest choice for you, you need to understand the advantages and challenges of
both options.
Possessing an entrepreneurial mindset is a plus but one should also have the
employee mindset as well. This lies in the fact that even though the
franchisee must have the steely determination and drive to launch a business,
they must be willing to be restrained and follow the directions of the
franchisor. The level of control for a franchisee is noticeably less than of
that of being an owner of your own independent business. However the level of
risk presented to a franchisee is less than that of an independent business
owner. Therefore this type of business is preferable for those looking for
less risk.
If we were to prepare a checklist of the traits, which were to be present
within the ideal franchisee, it would appear something as:
Identifying the major traffic patterns, the availability of parking close by,
the cost of utilities, the rent per square foot and various other aspects are
just a few of the factors to consider when locating your franchise site.
Whether it is a “Discovery Day” or other term that the franchisor uses, most
franchisors require prospective franchisees to visit their corporate
headquarters as a pre-requisite to buying a franchise.
Most prospective franchisees are drawn to the business by previous frustrating
experiences in their past employments. This could have been caused due to lack
of control over one’s work environment, being bound to report to superiors and
insufficient room to exercise one’s authority at their work place. The micro-
managing bosses, unresponsive organizational structures, or lack of voice in
the organizations process are a few of the reasons why many people decide on
investing in franchises as their new career. By investing in this business
they take control over their own life with a little risk as compared to
starting their own business from scratch.
Even the most honest and forthcoming franchisor can’t tell
you what it’s like to be a franchisee. You should take the time to call
existing franchisees and get some candid answers to your questions. Be careful that you don’t get a limited list of hand-picked contacts. It would be a waste of time to talk only to the most successful operators or those who are coached to give the “right” answers. Calling franchisees at random will give you the clearest picture of what you’re getting into. Here are some questions you should ask.
Most of the franchises offering Product oriented goods have very stringent
rules. Since their brand is associated with a tangible good they must
guarantee the desired quality from the consumer’s expectation. Franchisees
must purchase the goods from a designated supplier and must keep items in
their inventory as suggested by the franchisor. This can be company regulated
policies or simply to help the franchisor launch some of their new products.