Powills: If you want to make money, don’t buy a franchise

If you are at the point of buying a franchise, by now you should no longer believe in the Santa Claus of business – you know, those get-rich-quick schemes or the five minute abs. You should understand that all businesses, franchise or not, are not guarantees to financial bliss. If you’re debating buying a franchise, don’t buy a franchise to make big money. It won’t work. Even the best brands that have incredible ROI, margins or potential, you are not guaranteed success. And rarely does a franchise owner make bank with just one location. Buy a Business, Not a Franchise: Unless you’re joining some incredible concept that can produce $1M in its first year, if you think a single unit is going to make you big bucks –leave those ambitions at home. If you look at franchising as buying a business, you are going to set yourself up for more success. Plan your path of attack. If you are first in a market, have a plan to quickly scale so that you can reap the benefits of buying a franchise, as opposed to being the path setter. Think about scale. Is this a brand that you can grow? Look at your available capital. If I had to point to the No. 1 failure of franchisees, it’s undercapitalization. When deciding on the brand you will be investing in, make sure that purchase will allow you a rainy day fund. You will need it. Also, think about the exit. I know, it’s a long time away, but think about it. Buying a franchise should strengthen your end options because someone else would be buying an established business within an established brand. If you can’t see yourself selling a business like the franchise you are about to buy, look at another business. Leave Your Entrepreneur Tag at Home: If you want to be an entrepreneur, start a business. When you buy a franchise, you are buying a proven model – something that has been created, tested and is now available for duplication. You are not buying a seat at the board to explain all of the things you don’t like about the brand. Do your homework. If there is something you don’t like, put that in your cons category. And, if it’s something you will want to change once in, discuss your idea up front. Don’t buy a franchise unless you are ready to buy a franchise. Meaning, you are going to pay a royalty, and in many cases, you are going to pay into a marketing fund. If you have issues with this, stay away. If You Don’t Market, Hand in Your Keys: No business, whether a lemonade stand or a franchise, will attract customers without marketing. Local store marketing is the difference between good and great. Are you willing to hit the streets, shake hands and kiss babies? If not, make sure you have someone on your team who is. There are a million options for food, service and retail. You can stand out with product, but you can be outstanding with personality, great service and a commitment to always be branding. A franchise does not come with automatic marketing. You will have to invest over and over and over again to constantly raise awareness and drive sales. Head, Gut, Heart: When looking at the business you plan to buy (remember, don’t buy a franchise), after you get past the “can I afford this?” part, dig deep inside to make sure that brand is the one you are willing to get married to. It is really easy to marry, it’s very hard to divorce. If your head, your gut and your heart all tell you that you are making the right decision, go forward. If one is slightly off – listen to it. You can make money through franchise ownership, but only if you look at it as a business. Once in, remove the emotions and focus on running a business, in every aspect of the term. If you come to the table properly capitalized, are willing to market and get dirty (or have someone else who is), think about the plan, scale and the exit – then you have a fighting chance to be one of the success stories.