Food Franchise

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If you’re thinking of buying a franchise, but don’t know where to start, it’s probably a good thing you chose to read this. Starting a franchise is a big decision for any entrepreneur and a lot of thought and planning must go into it.

You need to consider several factors before starting a franchise business – this process might make the difference between success and failure.

Let’s see what we’re talking about.

Set your goals: This is what it’s all about. Make a list of the reasons why you want to enter this business. What do you expect to get in terms of return on investment or annual income? Most important, do you have the commitment to go the distance?

Identify your investment capability: Estimate how much capital is required and how much you can afford to invest for starting a franchise of your choice. Hence you need to know the initial franchise fee, royalty payment terms and other expenses beforehand. You also need to decide if you want to go it alone or rope in some partners.

Know your abilities: As with any business, the success of a franchise will depend on whether you have the requisite skills. Take a long, hard look at your previous achievements and experience and focus on your areas of strength. For instance, you may be good at managing people or a sales whiz or great with computers! To become a franchisee of Subway® chain of restaurants, you need to pass a test in math and English. Choose a franchise opportunity that can leverage your strong points.

Do your homework: Look at the franchisor’s track record before taking up that offer of a franchise. Is the brand doing well? How are franchisees treated? What support services and training resources do they provide? An absolute must do – talk to other franchisees before you make that call.

Understand scope of business: Find out if there are pre-conditions regarding outlet size, operations methodology, restrictions on territory or any other. Know what you can and cannot expect.

Read the fine print: Once you have zeroed in on the franchise you want to buy, ask to see the inevitable Franchise Agreement. The agreement will list out the rights and obligations of both parties, and will govern the terms of your relationship. Be sure to take a professional legal opinion.

Also ask for a copy of the franchisor’s disclosure document, called Franchise Offering Circular. This will help you assess the franchisor’s financial stability and general business acumen and predict if the company is financially capable of delivering its promises. Under the Federal Trade Commission’s Franchise Rule, you must receive this document at least 10 business days before you sign up.

Ask yourself: Finally, ask yourself the following questions before starting a franchise:

§ Do I need any start up training?

§ Which location is best suited for starting a franchise business?

§ What equipment is needed?

§ How many people do I need to begin operations?

§ Have I considered all the risks?

Remember, due diligence is essential, and some professional guidance might come in handy.

One of the greatest decisions of any entrepreneur is in the choice of franchise that you buy in to. Therefore, there is a lot of planning and researching that needs to go into the process before deciding on a final franchise.

You need to have goals to work towards. For example, think about why you want to start a business and what you expect to get out of it. You must also think about if you will have the commitment to the business throughout as it can be a long and hard process at times.

Buying info a franchise may cost more or less money than you originally expect so make sure you know what financial requirements are expected of you and if you can afford them. This includes franchise fees, royalty payment terms and other expenses that you may have to pay along the way.

In order for your franchise to be a successful one you must ensure that you have the right qualities and skills. To do this you will need to look at your previous achievements and experiences and assess you areas of strength from these. There are certain maths and English skills that you need to have to become a franchisee of the Subway® restaurant chain. These will be tested before you can become a franchisee. In is advised that you choose a franchise to buy into that can leverage your strong points. Look at the background of the franchisor as you do not want to take up their offer if they have a history of being unreliable and unsuccessful. You will also want to work for a franchisor who treats their franchisees well and gives them support and training throughout the whole business process. You should definitely talk to other franchisees in order to get an idea of how that particular franchisor works before applying to the franchise opportunity.

There may be restrictions within the business that you need to be aware of in terms of outlet size and restrictions on territory. It is advised that you familiarise yourself with these when making your decision. Agreements that you are required to sign will list out rights and obligations of both you and your franchisor and these should be read very carefully, if possible with legal opinion.

Franchise Offering Circular is the franchisor’s disclosure document and you should make sure that you ask to have a look at this before you sign up as a franchisee. Reading this will help you to evaluate the financial stability of the franchisor and therefore see if they are financially capable of supporting you as a franchisee. It is law that you are given this document to read at least ten days before you sign up to the franchise.

So, before deciding to start up your own franchise, ask yourself these questions:

• Is training required before starting?

• Where is the best place to start up a franchise business?

• What equipment will be needed in order to start up th franchise?

• How many people will be required to start the operations of the franchise?

You will also need to consider all the risks that you may be open to throughout the business process as this will help you to minimize these risks and make your franchise business a success. You may like to get some professional guidance when choosing a franchise.

If you’re interested in having a franchise, you probably want to pick from the best ones out there. No one wants to pay a lot of money to start up a franchise, only to have it fail. Naturally you probably have a preference for what type of business you like the best. You have to ask yourself what’s more important – the type of business that you would like to patronize, or the type of business that you can make the most money at. Ideally you should try for both, but that’s not always possible. In order to make sure you have the highest chance of success, pick from these top franchises and you won’t have to worry as much about whether you can afford to do it and whether you can make it work and make a living off of it:

-7-Eleven

-Subway

-Dunkin’ Donuts

-Pizza Hut

-McDonalds

When you choose one of the franchise opportunities listed above, you can feel safe knowing that they’re the top five ranked franchises based on the ‘Franchise 500,’ which has been around since 1980 and is seen on the Entrepreneur.com Website. These five are the top options based on several areas of financial and business importance, including how much money can be made off of them and how high the rate of failure is for a franchise from that particular company. Also looked at are areas like the financial strength that the company has overall, the stability, the growth rate, how long the company has been in business and how much it costs for start-up of a franchise. The access to financing for starting up a franchise is also very important, because most people who want to do this can’t afford to pay for it out of pocket.

Q: I really want to start my own business, but I have no idea what business would be best suited for me. I’m also eager to get started, but I don’t want to pick the wrong business just because I’m impatient. How should I go about deciding what business would be best for me?

– Samuel J.

A: Before I answer your question, Samuel, I want you to reach around and pat yourself on the back for not letting your eagerness push you into making a wrong decision. All too often we entrepreneurs tend to let our impatience drive us to make decisions that we later regret. In business such haste can be very costly, indeed.

I always compare starting a business to jumping into a pool of freezing water. There are typically two types of entrepreneurs who take the plunge.

The first are the “Toe Testers.” These are those cautious folks who just stick their big toe in the pool to gauge the temperature of the water. It is for these careful entrepreneurs that the phrase “testing the waters” was coined. Toe Testers enter the business pool slowly, a little bit at a time. The lesson to be learned from Toe Testers is to start slowly and don’t feel like you have to wade in too fast. Ease into the business pool gradually to make sure it’s right for you. Remember, many entrepreneurs realize that the business world is not right for them only after they are in it up to their necks. And that’s when the term “sink or swim” takes on a whole new meaning.

The next type of entrepreneur is the “High Diver.” These are those fearless souls who climb the ladder and dive into the business pool head first without worrying about the depth of the water or the dangers that lurk beneath the surface. It is for these entrepreneurs that the phrase “damn the torpedoes, full speed ahead” was coined. Quite often these entrepreneurial daredevils find themselves drowning in unknown waters or end up with their heads buried in the bottom of the pool.

Both types of entrepreneurs may find success, depending on how well equipped they are to handle the water they are diving into. Here are a few ideas to help better prepare you for the plunge.

** Let your experience be your guide. Start with what you know. If you have spent twenty years working as an accountant or you love to build wooden toy trains as a hobby, consider how you can take that experience and turn it into a successful business. You might also find a great business idea right under your nose. Look around your workplace. Do you see needs that are going unmet or can you think of a better way of doing something? If so, you might have the seed for a profitable business.

** Do what you love and enjoy what you do. I can’t emphasize this enough. Many people start a business for the wrong reason: to get rich. While it is true that many millionaires in this country made their fortunes from their own business ventures, that should not be your sole motivation for starting a business. If you don’t enjoy what you do, you will not be successful, at least not from a mental point of view. Sure, the monetary rewards can be tremendous, but the mental anguish of working in a business you don’t enjoy is a high price to pay. I talk to entrepreneurs all the time who are running successful businesses, but are so unhappy as a result that they literally make themselves sick. If you don’t enjoy what you do the business will become a chore, not a joy.

** Don’t reinvent the wheel, just make it better. Many first time entrepreneurs assume that they have to come up with a new business idea to be successful. That simply is not true. Most successful businesses are born not of innovation, but of necessity. Instead of trying to come up with an idea that changes the world, take a look at the world around you and see where there might be a void that needs filling or a business concept that needs improvement.

Many successful businesses have been built by taking a traditional business and making it better. Domino’s Pizza was certainly not the first to offer home delivery of pizza, but they were the first to guarantee it would be delivered piping hot to your door in 30 minutes or less. Amazon.com was not the first company to sell books, but they were one of the first that would let you buy books from the comfort of your own home while sitting in your underwear.

** Focus on a niche. Many businesses have gone broke trying to be all things to all people. The ability to offer a gazillion products under one roof is all well and good for Wal-Mart, but not for most new small businesses. Try to identify a niche that you would enjoy working in and think about starting a business therein. If you love to work outdoors, consider starting a landscaping business. If you enjoy working with numbers, think about becoming an accountant or CPA. When’s the last time you had your gardener do your taxes? You get the idea. Focus on a niche and become an expert in your field.

** A franchise might be an option. Many new entrepreneurs consider buying a franchise operation instead of starting a business from scratch. Franchises are a good way to jumpstart the process because they have already done much of the hard work for you. They have proven the business model, established guidelines for running the business, spent millions of dollars on establishing the brand, etc. Buying a franchise is typically a very expensive and involved process that is beyond the scope of this article. The best thumbnail of advice I can give you is to thoroughly investigate the franchisor and the opportunity, use your own attorney to do the deal, and read the fine print in the franchise agreement.

** It’s hard to swim in a crowded pool. If the business pool is already filled with other companies doing the same thing you want do, chances are you will fail in the face of established competition. To succeed in such a crowded pool you will have to do something to stand out from the crowd (and I don’t mean greeting customers while wearing a bright red Speedo). If you can’t quickly and easily differentiate yourself from a large group of competitors, you’re better off choosing another business.

** Above all, take your time. Whatever business you choose to start, I encourage you to take the time required to make an informed, intelligent decision. Think about starting part time while you still have your current job (and income) to fall back on. Talk to friends and associates who use the product or service you will provide to see if they would consider become paying customers.

Remember, in business you can end up swimming in success or sinking in failure. The key to your success might just lie in the sensitivity of your big toe.

Here’s to your success.

Tim Knox