DON’T GET A JOB! Be Self-Employed
Buying A Franchise: Making The Right Choice
With hundreds of franchise opportunities to choose from, how do you choose one that’s going to perform for you? Here’s our road map to starting up in business
O
ne of the questions that we are regularly asked is: ‘What’s the best franchise, then?’ Unfortunately, it’s not a question to which there is a simple answer. You see, there are hundreds of different kinds of franchises available today, some of them very good indeed, but no single one is the best. How do you compare a café franchise with a building business, or a courier franchise with a childcare centre? You can’t – but you can work out which one will best suit you. There are lots of happy franchisees in different businesses, but there are some miserable franchisees around, too – even in good systems. They are miserable because they made the wrong choice for their own personality, their circumstances or their time of life. In this article, we’ll help you work out which is the best type of franchise for you and then show you how to select from the choices available. There are ten key stages laid out in our ‘road map’. Some of them you may need to do more than once; many will overlap or take place at the same time. Follow the map and look up the other references it features, and you’ll end up in the right place for you.
Assess your own position The first thing you need to do is decide what sort of business you are looking for. You need to work out what would best suit you and what you would want from it. Consider: What skills do you have – not just work skills but hobby and social skills? Are they transferable to a new career? Are you good with your hands? Good with people? Good with numbers? You want to look for a business where your skills will become real strengths. However, that doesn’t mean you have to have experience in the same industry – some 80 percent of franchises say ‘no experience required’ because they provide full training. It’s more important that you have the right aptitude and the right attitude.
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Are you prepared for what self-employment means? Running your own business involves working harder than you have ever worked in your life, especially during the start-up phase. Are you willing to work long hours and weekends? Give up sporting commitments? Reduce your social life? In addition to actually doing the work itself, you’ll also need to handle admin, paperwork, maintenance, compliance and all sorts of other tasks. Does your family really understand this and have you got their total support? Without it, you’ll be putting yourself under constant stress and both the family and the business will suffer. Do you prefer working by yourself or leading a team? Are you a ‘handson’ person or a ‘hands-off’ person? Are you a night owl or an early bird? If you’re an early riser, a late night pizza business isn’t for you. If you like a lie-in, you won’t enjoy being a baker. Will you feel comfortable without a regular source of income? That salary won’t be automatically appearing in your bank account any more. Is it OK to put your house or savings on the line? Do you think positive without being over-optimistic? Do you respond to goals and deadlines?
Get the money right The cost of buying into a franchise ranges from under $5000 to over $1 million. What matters is not how much you have to spend, but how much you – and your new business – can afford. Most people require some sort of finance. Access to finance is not usually a problem provided the business stacks up as a good proposition, but lenders will require some sort of security. In some cases, where the franchise is a proven brand, they will lend against the value of the business itself, but part of the equation often involves borrowing against property. When calculating what you can afford to borrow, remember that it is the value of the equity in the house, and not the value of the house itself, against which the bank will lend. The Franchise New Zealand
Spring 2021
Year 30 Issue 03