Don’t be a fool! Mistakes people make when selecting a franchise
Are you a natural-born prankster? If so, today is your day!
It’s April Fools’ Day, a universally recognized day of harmless practical jokes for people to play on their friends. Even businesses have gotten into the act in the past several years with some terrific marketing stunts. Here’s a link to a few of my favorites from last year.
For many, the best thing about April Fools’ Day is that come April 2, it’s over. Many of the pranks will be funny, some will be annoying, but all will be over by Saturday.
If only the same could be said for the fools.
Too many people fail with an otherwise great franchise because they made foolish decisions in the franchise exploration process. There is a reason why franchisors make sure that franchise consultants are able to help pair candidates with franchises free of charge; we all want you to succeed. That’s why we make as many resources available as possible so you can make an educated decision when selecting a franchise.
It’s one thing to be a fool for a day in April; it’s another to be one when choosing your new life as an entrepreneur.
Here are some big mistakes franchise candidates make and how to avoid them.
Falling in love with a brand or product: This is by far the most common mistake. A candidate loves a product or brand so much as a customer that he or she believes that will translate into business success. There’s a reason why franchise consultants discuss things like lifestyle design, corporate culture, personal dreams and goals way before ever showing a candidate specific franchises.
Avoid this mistake: Think about what you want a franchise to do for you and your family. What are your skills? What type of role do you want to fill with the franchise? How much time do you want to invest? Figure out how a franchise can meet your personal and professional goals, then start checking out options.
Failing to understand the concept of franchising: Yes, franchisees are entrepreneurs. They’re not exposed to the same risks as independent business owners, but they don’t have the same freedoms either. The biggest benefits of franchising are the proven models of success and unmatched support systems, but franchisees are expected to follow the proven system, not try to reinvent the wheel.
Avoid this mistake: Do some exploration with a franchise consultant to see if you’re right for franchising. Franchising isn’t right for everyone, so if I don’t think you’re a qualified candidate, I’ll tell you immediately if I think you’d be better served doing your own thing. You can take my online franchisee quiz here.
Underestimating expenses. Sure, there are lots of franchises you can start with as little as $10,000, but that doesn’t mean that’s all you’re going to need to get through your first year. There are franchise fees, rent, equipment, payroll, marketing and other startup costs associated with launching a franchise, and while the franchise will help you make the right operational choices, the cost of those choices is entirely yours.
Avoid this mistake: Franchise consultants work with financiers that specialize in franchise development. Some franchisors not only offer internal financing, but some offer discounts for military service, multi-unit purchases or ethnicity. Work with an expert to ensure you have enough capital to survive the growing period long enough to see your franchise turn a profit. Entrepreneur magazine runs a great, daily feature called “Franchise Players” that examines how people become franchisees and some of the specific costs associated with their franchise. Here is one of my favorites!
Waiting too long to get started: Certainly, if the conditions are correct, some franchises can be launched just a few weeks after your first inquiry, but that’s not the norm. If the franchise you are interested in requires real estate, specialized equipment, special financing, etc., it can take months before your new business is ready to open.
Avoid this mistake: Thinking about opening your own business within the next year? Make some low-risk plans now. Talk to entrepreneurs you know about what their lives are like. Engage your family in conversations about your plans. Create a family budget and determine how much money you need to survive. Call me and learn more about the process. These are all no-cost steps that could advance your planning by months!
Want to know if small business ownership is right for you? I've helped more than 2,000 franchise candidates make that decision, free of charge. Give me a call at 919.233.3534 or send me a note at [email protected].