Have you noticed that there are a lot of franchise businesses operating these days? You’ll find many of these inside malls and department stores but a lot have also been popping at many areas, including near schools and offices.
Knowing this, you might be tempted to get a franchise to start a business quick; however, you should also take note that there are a lot of franchise businesses that went bankrupt, disappearing from their spot after just a few months.
While franchising is supposedly the ‘easy’ way to start a business since you are getting something that is a complete package, including the brand name, it does come with its risks, just like any other business.
So, before you buy a franchise, ask yourself if franchising is right for you – or if you should just start a business from scratch.
Assess your finances and determine whether you can afford to invest in a franchise, within your risk tolerance. This means that the money you invest in a franchise is something that you can, technically, afford to lose!
Just in case the business goes bankrupt because it didn’t ‘click’ with your target market, can you afford to lose that money?
Of course, you are starting the business with the goal to win, not to lose; thus, to avoid getting bankrupt, you have to do research.
- What is this type of business?
- Who is your target market?
- Is it easy to sell the product?
- Will the product expire easily?
- Are the prices competitive yet affordable for your buyers?
- Is there a lot of competition?
- Can you find a good location, near your target market?
- Is the franchisor helpful?
- Can you find the right people to man your business?
- Is the franchise price worth the investment or is it too expensive?
These are just some of the things you have to ask yourself before you consider getting a franchise. It is also important that you do a background check of the company and brand you plan to franchise.
Lastly, ask yourself why you want to franchise. Is it because you want to start an ‘easy’ business, with everything laid out for you or because you were just tempted by a marketer’s offer that seemed too good to pass up? Know your motivations and do a thorough research, preferably with feasibility study, to ensure that you won’t be making a rather expensive mistake in buying a franchise that’s bound to go bankrupt.