Opening a franchise might appeal to you because it seems like a simple, turn-key operation. And in some respects, that is true. Much of the development work has already been completed, so that you can opt into a business model that is well received and profitable.
But that doesn’t mean any franchise is a guaranteed success. Each decision you make along the way will carry considerable weight and will influence the direction of the business. In particular, pay careful attention to the following four factors as you establish your franchise location.
One: Carefully evaluate financing options.
If you do not have enough cash to open your franchise (or don’t want to use it), in most cases new franchisees confront two different opportunities to finance their endeavor:
- Finance the start-up costs through a bank – most commonly through a ten year SBA loan that covers 70% of the entire cost to open the franchise – you must have the other 30%.
- ROBS Rollover 401k – allows you to use your IRA or 401k to finance your new franchise
Financing is a long-term decision that can be costly. Carefully evaluate each option and consult with other franchise owners about their experiences. A franchise financing specialist or business planning attorney can also lend invaluable expertise to this part of the process. In most cases, your franchisor will have a list of financing resources available to help you get the financing you need.
Two: Location is everything.
For brick-and-mortar businesses, location can make or break the endeavor. For example, a restaurant should be located conveniently for the target demographic. A potential restaurant franchisee would ask themselves if they’re relying on the business lunch demographic… Or targeting the family dinner concept… and what about the after-hours crowd? The location that is perfect for one population might be inconvenient or a turn-off for another.
In many cases, the franchisor will provide assistance in choosing the right location for the franchise. After all, they want you to succeed.
Three: Seek to understand your market.
Location is not the only consideration that matters within your market. Spend some time working within the industry to gain a deeper understanding of how it works. If you’re new to the market, conduct extensive research by collaborating with other franchise owners and business owners in related industries. Your franchisor might offer additional guidance in this area as well.
Four: Recruit the right team.
Operating an established business is one thing; getting it off the ground in the first place is an entirely different, and even more complicated, endeavor. Choose each team member by focusing on strengths and even personality types that complement one another. By focusing on gathering a diverse skill set you can ensure that all of your bases are covered.
As a part of your franchise agreement, your franchisor will probably provide assistance with training new employees. Take full advantage of this opportunity. Your franchisor has already learned what works and does not work within this business model and will help you develop the best possible team to launch your new business.
Does opening a franchise with an already-proven business model appeal to you? Contact us for more information on our unique franchise opportunity, and to explore what Parlay Cafe has to offer you as a new business owner!
Owner, Parlay Café