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When Is the Right Time To Buy a Franchise?

Buying a franchise should be one of the most heavily researched decisions of your life, but timing is everything. Here’s how to know when the time is right.

Prospective franchisees come from all lifestyles, backgrounds and careers, but they all have one thing in common: a dream of owning a business and the liquidity to make it happen.  

In that respect, the right time to buy a franchise largely comes down to when you have saved enough money and found the right opportunity. Still, it’s not always easy to find the right moment to pull the trigger. 

Jack Armstrong, president and owner of franchise consulting firm FranNet in New Jersey, says there are a few key things he always tells prospects to consider when deciding when to sign on with a brand.

“Look at the reasons why you want to buy a franchise — what’s your motivation?” asked Armstrong. “Are you just turned off from your corporate job, or do you really want more control and flexibility in your career? If you’re just hating your corporate job and trying to escape it, you’re probably not ready to own a franchise.”

Really ask yourself if franchising is what you want, or if you’d be happier in another part of the corporate world. The old proverb better the devil you know than the devil you don’t rings true here. 

All Ages Welcome

And while there are franchising opportunities for people as young as 18, Armstrong says that typically franchising candidates fall in a certain age range. 

“I think there’s a franchise opportunity for most people, but it really depends on the economics,” he said. “Generally franchise buyers are a bit older, in their mid-40s with a greater balance sheet and less responsibility. Maybe the kids have moved out of the house and they have more time for a franchise.”

“Some millennials do have the money, but they don’t have the resources to buy what they want or make a full commitment,” said Armstrong. 

Finding the Right Time in Your Career

On the other end of the spectrum, franchising makes a great fit for many going into retirement, said Armstrong. “It used to be, you spent part of your life getting educated and prepared, then you start working, and then retire. But because people are living longer, they’re outliving their resources, they’re outliving their retirement savings.”

For that reason, buying a franchise can fit ideally with retirement, provided you can find good staff to take over most day-to-day operations. Many franchises market themselves towards these older entrepreneurs, while others demand full-time devotion. 

Knowing When To Pull The Trigger

Let’s say you’ve found a brand you love, you have the money for it, and you’re anxious to get going. Do you wait for a brand to produce a new FDD, or do you sign on to the original terms? This may seem the ultimate gamble, as you don’t know if the new terms will be better or worse. 

But, according to Armstrong, there’s a simple rule of thumb to follow. 

“If you’re looking at a well-established franchise, go ahead with the old FDD,” he said. “If it’s a newer brand, wait for the new one.” 

Measuring Risk vs. Reward

The right time to buy a franchise is the time when you feel comfortable taking a risk. While franchised businesses are much less risky than traditional startups, all business deals in some level of risk. 

Being a brand’s first franchisee can be exciting and afford you complete attention and close partnership with the corporate office, but in this case, you’re taking on less of a proven concept. 

Opening the one-millionth Subway franchise, on the other hand, won’t be as exciting and won’t get you in on the ground floor. That said, you’ll know for a certainty you’re backed by a major brand with tons of capital and resources. 

According to Armstrong, you have to figure out what level of risk you can stomach. 

“You have to look at the risk nature of the person,” he said. “Some people are real risk-takers and others are not. I don’t think risk is related to age. It’s not related to wealth either. It comes down to individuals: Some are willing to risk it to get ahead, and some scared to lose what they have.”