Some people would never consider a franchise, because they couldn’t imagine giving up that much creative control over their business. Other people think a franchise is a guaranteed path to big-time profits. Neither assumption is entirely accurate. There’s a lot to consider when you weigh the drawbacks and benefits, and I’ve spent a great deal of time researching, exploring and experiencing them all. In this episode of The New Entrepreneur, I talk about why I bought multiple Booster Juice franchises, and I interview a successful Subway franchise owner about his experience.
Action Steps for Success
Buying into a franchise is a decision that shouldn’t be taken lightly. It will require a huge investment of time and money, so do yourself a favour and go on a major fact-finding mission:
- Make sure you’re OK with the disadvantages of owning a franchise. As I mentioned in the video, it can be tough to give up control over various aspects of your business, including pricing, design, products and materials. Some franchises offer more creative wiggle room than others, but know that you are buying into a system, for better or worse.
- Think about what kind of industry you would enjoy being part of. I bought three Booster Juice franchises because I was passionate about providing healthy, convenient food to my community. What would you feel good about selling? Make sure the product or service is something you could happily promote, because it’s in line with your values.
- Think about whether this type of franchise will do well in your community. One of the reasons my stores are so successful is that my town gets extremely hot in the summer months, bringing droves of thirsty customers in search of a refreshing fruit smoothie. I was very deliberate in choosing a product that could serve the needs of my particular community. And I was also aware that in the colder winter months, I wouldn’t be as busy. This is part of the roller-coaster ride of owning a business, but if you do your research and are prepared, you can mitigate the risk. In my case, I make sure I have plenty of money saved up for the lean months in the winter, and do everything I can to capitalize on the summer rush.
- Evaluate the various franchises in your area of interest. When I looked at the options for healthy fast food, I was thinking about the brand reputation of each franchise, their ingredients, the quality and taste of the product, how effective their marketing was and how many other stores there were. I knew Booster Juice could be successful in my town because I had seen so many other successful stores across Canada. I loved that they were on a growth curve, opening more and more stores. I also appreciated the way the stores were designed.
- Once you target your top 2 or 3 franchises, start talking to as many owners of those franchises as you can. I called Booster Juice owners in other parts of the country and asked them everything I could think about, including what their numbers were like, and how the head office was to deal with – how much support they got. And then I visited several Booster Juice locations to see how their stores felt, and spoke with staff.
- Contact the head offices of the franchises you’re most excited about, and ask for franchising information. They should be able to give you an information package that includes a contract agreement outlining your upfront investment cost, any initial and on-going fees, and the royalty percentage you will be required to pay the franchisor. The agreement should also clearly spell out the support the head office will provide you as you start and grow your business.
- Get financing. If you’ve done all the above research and everything looks good, create a solid plan for financing the business. This could include bringing partners, angel investors or venture capital firms on board, or it could mean going to a bank. Stay tuned to the New Entrepreneur, because I’ll be coming out with an episode all about financing very soon!