5 Things to Consider Before Choosing a Franchise
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CREDIT: Dreamstime.com
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Thinking of buying a franchise? Before you sign up to run a fast-food joint or a convenience store, you might want to consider the many, many franchise opportunities that exist today. There are a whole host of franchises that are off the beaten path—everything from organic gardening to furniture repair. Odds are that one of them will fit your tastes and your budget.
There are several benefits to owning a franchise, including backup support and a clear business plan that's already been proven to work. Here are the key things to consider if you're thinking of buying a franchise.
Do you need experience?
"The key to a successful franchise, whether it is a traditional one or more of a niche opportunity, is to understand the marketplace and have good business acumen," said Tom Wood, president and chief executive officer of Floor Coverings International, a Norcross, Ga.-based flooring franchise.
You don't need to be a flooring expert to get involved in the franchise, which is the case with many franchises, Wood said.
"In fact, we strongly prefer that our franchisees don't have experience in the flooring industry," he said. "We want franchisees who understand the art of marketing and the need for sales. We want franchisees who are focused on customer service and ways to increase transactions. Good quality franchisees are hard to come by."
How is the market changing?
Franchise opportunities often emerge as the result of changing consumer tastes. Because franchises have professional marketing and planning departments, they can react quickly and effectively to changing consumer trends .
"When we started out, 'green' and 'organic' were not the buzzwords they are today," said Karen Cancilla, founder and CEO of Anaheim, Calif.-based groOrganic. The company offers franchises that involve installing and maintaining organic vegetable gardens in backyards, schools, health care facilities and businesses and providing educational programs and high-quality organic products. "It is a small target, but it is growing like crazy," she said.
Is there a need for your franchise?
Before choosing a franchise, it's important to assess whether there is a real need for what your company will be offering.
Todd Gerry, president of Lawrenceville, Ga.-based Tradebank International Franchising Corp., the franchising arm of Tradebank International, said his franchise business focuses on an alternative payment option — barter — something which is gaining interest in a down economy, especially among small business owners looking to swap their products or services for things they need through a barter network.
"Barter and other alternative payment methods are hot-button issues for business owners looking to reduce their expenses while increasing their profit margins," he said.
Does the franchise offer support?
Because unconventional franchises focus on unusual products and services, training and support is important.
"We have accountants, lawyers, IT professionals and all kinds of people who get into this business," said Al Crnjac, who just signed on for a fourth Fibrenew franchise in Eastern Ontario. The franchise, which is based in Calgary, Alberta, specializes in leather, vinyl, plastic and cloth repair. "The training is excellent and there is an online library that is always available as a reference."
Is the business recession-proof?
Before choosing a franchise, it's important to consider whether the business can ride out rough economic times. The answer may not always be obvious.
"We are a full-service staffing franchise, offering permanent and temporary staffing services and employment solutions, including evaluation hire, temporary staffing, professional search and human resources," said Dan Gunderson, franchising executive for Oklahoma City, Okla.-based Express Employment Professionals. "Staffing and HR are areas where there is always a need, no matter what the economy," he said. "Even if companies are not hiring full-time workers, they are looking for temporary or contract employees to fill the gaps and they need help with human resources issues."