3 Areas to Research When Buying a Franchise Opportunity

Purchasing a franchise can be quite lucrative. Because you’re not starting a business from the ground up, you can get up and running more quickly. This means you have to function withing a specific structure. If you tend to strike out on your own and ignore the rules, a franchise may not be the business for you.

1. Find Out the Investment Term

Franchisors don’t earn money if their franchisees don’t succeed. A franchisor serves as a mentor to the franchisee. If the investment term is short, you won’t have much time to learn and your franchisor can end the relationship. Before you put a great deal of money and time into any franchise, make sure you’re going to be connected to a franchisor you can work with.

Because you will also probably need to sign a non-compete clause, the skills you build in the process of building your franchise will not be available to you if the franchise fails. If you’re going to take on your franchise as full-time employment, you must take care to make sure that you are fully able to commit to the franchise.

2. Consider the Employee/Contractor Question

It’s possible to purchase a small franchise that will allow you to work with contracting workers instead of employees. Because hiring employees increases your responsibilities to the worker, it may make sense to start with a franchise that only works with contractors.

You might consider a franchise that contracts with home healthcare aides to support the elderly with heavier tasks. You could invest in a franchise that provides home cleaning services.

Both of these businesses allow you to offer custom services to a market that is expanding. While you have the responsibility of carefully screening anyone who goes out into the world to represent your business, you can avoid the burden of hiring employees, especially if you’ve never been in charge of hiring and managing employees in the past.

3. Review Market Saturation and Competition

Being the first franchisee in a region will require some extra legwork as a marketer, but being one of ten franchise owners in your market will create other challenges. If you hear of a small franchise that is growing in popularity in a market similar to yours, it’s time to look at the costs and the requirements.

If your friends in a large city are raving about a service or product, you can get ready to be the first franchise in your region. Take care to review the franchisor requirements; for example, if your current location hasn’t topped a particular population requirement, you may not gain access to a franchise for a time. You can still prepare and work on relationships that will make your launch a simpler process.

When you buy a franchise, you’re buying a job. This business will need to be managed and workers, either contract or employee, will need to be screened and trained. Review your current workload to make sure you can give your franchise the effort it deserves for success.