1. Your Personal Finances
You need to take a hard look at your personal finances before you think about a franchise. It is important to know your total debts and assets as well as have an emergency fund on the side. Cash flow is a serious concern at the start of opening your new business, so you should be prepared to weather some bumps along the road with some personal savings set aside.2. The Direction of the Company
Before you buy into a franchise, you should ask serious questions about the long term direction of the company. You will want to make sure that the company is still in a growth phase and that franchising will remain a part of that. You must be very comfortable with the goals of the brand you are representing.
3. Understand the Role of Management
If this is your first time owning a business, you will want to make sure you know exactly what support to expect on the corporate side. A good way to find this out is to speak with other franchise owners in that company about what their relationship is like with the management side. This will be the best indicator of what you can expect yourself.
4. Know Your Territory
Once you choose a location for your franchise, you are going to be tied to that area. You should invest considerable time and resources into making sure that the territory is a good choice for you both personally and financially.
5. Understand the Business Model
This is the most important aspect of deciding on a franchise. You need to be totally clear on the fundamentals of the business model for that company. Part of this is looking for a proven track record of success for other franchises and having a clear timeline on when you can expect to turn a profit. It is a good idea to look at figures by each individual year that a franchise location is in business. This will give you an idea of the time it takes for the business to truly get off the ground and become profitable.