7 Key Questions You Should Ask Yourself Before Starting a Franchise

Starting a franchise is a viable strategy for any budding entrepreneur as it offers several advantages over starting an independent venture. However, the potential rewards come with high risks; success is  by no means guaranteed. If you’re wondering whether or not you have what it takes to become a successful franchisee, take a hard look in the mirror and ask yourself these seven questions:

1. Do I have a clear future vision of what I want to achieve?

Before you make the commitment to starting a franchise business, try to nail down exactly what you’re hoping to achieve. How involved do you want to be in the business? Is this franchise going to be your career or a side hustle? What kind of lifestyle do you visualize for yourself? Determining these goals early on will make it easier to choose a franchise model that complements your vision.

2. Am I proactive enough to keep my franchise moving forward?

The success of a franchise often hinges on continuous improvement in the processes, from customer interactions to inventory management. “It’s working fine” should never be an excuse for ignoring opportunities for improvement. Every transaction should be scrutinized with an eye towards making the  business better. A proactive approach to improving your business will serve you well as a franchisee.

3. Do I have the grit and determination to overcome obstacles?

Recently, every business owner in the U.S. had to deal with the impact of the COVID-19 pandemic and ensuing shutdown. Some managed to weather the storm, but many fell by the wayside. All this to say, you will inevitably find yourself facing unknown obstacles down the line when you open your franchise. Belonging to a franchise network does provide some built-in support for dealing with these unexpected hardships, but it’ll be your own resilience and determination that carries your business through the tough times.

4. Do I have enough capital to start a franchise?

You need to have a firm grasp on your financial obligation when starting a franchise, from franchise fees to initial investments to ongoing expenses. In addition to the fees and expenses paid up front, many franchisors require you to have a minimum amount of capital on hand to ensure you’ll be able to keep the business afloat while it’s finding its feet. You can find the capital requirements for a specific franchise by consulting its Franchise Disclosure Document.

5. How will I financially support my franchise?

If you don’t have the necessary capital just lying around, you still have a few options to help you finance your franchise. Many franchisors have prearranged financing through preferred vendors, which should make it easier to get an SBA loan. If you have home equity or a securities portfolio, a personal loan might be a workable strategy. You might also consider rolling over a portion of your 401(k) or IRA to generate some tax-free capital for your business. Regardless of which option you choose, it’s important to have these details nailed down before you commit to launching your business.

6. Which franchise industry is right for me?

It’s important to be passionate about your business, but that doesn’t necessarily mean monetizing your hobbies and interests. What you should be looking for is a business model that fits well with what drives you. For example, you don’t have to be a gym rat to own a fitness franchise; if the business model fits with your future vision and you can derive satisfaction from knowing you’re helping your clients transform their health, then it’s a good match.

7. Should I work with a franchise broker or go it alone?

Doing your own research online can be a real challenge. Not only are there thousands of brands vying for attention, but most of the information you find is tailored to consumers rather than potential franchisees. Working with a franchise broker is a great way to narrow your search from the get-go;  you set your criteria and goals at the beginning and then your consultant guides you through the process to help you find the franchise brand that fits you best.

While there’s a lot to consider when starting a new franchise, ultimately the decision is an emotional one that requires a bit of self-reflection. Asking yourself these questions and answering them honestly will let you know if you’re ready to embark on the path to franchise ownership. If you’re not ready, figure out exactly what in your life you need to achieve or change to make yourself ready. If, after all of this, you’re still excited by the prospect of starting a franchise, then odds are pretty good you’ve got the confidence you need to succeed.

1851 Franchise is here to guide you through the process of starting a franchise with expert advice and full transparency. If you’re just starting out on your franchise journey (or if you’re still trying to decide if owning a franchise is the right path for you), visit the 1851 Growth Club and see what opportunities are available for you.