Keys to Know About Franchising when in Job Transition

Double-digit unemployment, the highest in the U.S. since 1983, has led many people to consider buying a franchise. Being your own boss, getting off the corporate merry-go-round, and envisioning a better lifestyle sure sounds enticing. If you are one of those, however, the first thing you need to do is to heed this important piece of advice—should you ever become a franchisee, please don’t ever think or say, “Will franchise for food.”

Not saying don’t buy a food franchise, but rather, don’t rely on getting into franchising as a means of creating a quick cash flow to feed your family and yourself. Consider these due diligence factors before you get ready to sign on the bottom line:

• Check with a few other operators to get their cash flow feedback and experience
• If you are purchasing an existing business, confirm your inventory obligations
• If someone else will run the enterprise day-to-day, how well will they manage
• Fully understand what your franchisor fees and other obligations will be
• Consider engaging a business advisor if you have no experience in business
• Develop and understand a break-even analysis with your financial expert

Secondly, you need to keep a long-term perspective about owning a franchise. Realize that often, it is only after several years of persistence and tight management controls, that the real monetary rewards are achieved. In fact, remember that, in most cases, minimum franchise agreements last five years. Do you have sufficient back-up funds and patience to make it through the long haul?

The third key element to consider is somewhat more of a psychological hurdle: understand that being a franchise owner can be as tedious as your most recent job if you let it be. Getting up at four o’clock in the morning to make the donuts may offer lucrative rewards, but not everyone has the personality and temperament to do so. Rather, you need to sharpen your business and human resources skills so that your operation becomes a well-oiled machine over time instead of a chore.

So, how do you determine this factor? Your best choice is to enlist the aid of a franchise consultant who can advise you about the best fitting opportunity to match your attributes.