There are many good reasons to pursue your dream of owning a successful franchise. For starters when you buy a franchise, the idea and process of running this business has already been proven. However, owning a franchise is not guaranteeing success, but minimizing risk.
After understanding the facts, and looking at the guidelines, responsibilities and obligations of franchising, aspiring franchises need to do a self assessment to determine whether this form of entrepreneurship is for them or not, suggests Kevin B. Hicks, a partner with Blackman & Associates, a franchise consulting firm with offices in New York and Atlanta, which provides advisory and acquisition services for individuals and companies. Blackman & Associates identifies viable and lucrative franchise opportunities for both startups and existing businesses.
Whether it is a food concept or business service concept, there is a litmus test and guiding criteria you can use to select a business type and brand. Hicks, who has also been a multiple unit owner of several food franchise concepts, shares four minimum factors one should consider in choosing a franchisor’s brand that is right for you.
1. Skill: There are some franchises in specific professions or where certain skill sets increase the prospect for success, says Hicks. For example, a mechanic and Midas Muffler; an educator and a daycare/day school concept; a real estate agent and a ReMax or Century 21 office. If you are outgoing, affable, and service oriented, you may do well with a food concept, Hicks says.
“If you are good with math, you may do well in a Jackson Hewitt or Liberty Tax Service franchise.”
2. Interests: There are franchises that present opportunities for individuals to pursue their personal passion or interests. Cooking and food service (Subway, T.G.I Friday’s), cleaning (Coverall, Molly Maid), fitness (Anytime Fitness, Curves), hairstyling (Supercuts), floral arranging (1-800-Flowers), massage therapy (Massage Envy), traveling (Travel Advisors), pets (Petland), real estate (Hilton hotels), staffing services (Express Personnel) and health or nutrition (GNC).
3. Need: One of the most desirable features of franchising is that these businesses provide a high quality standard of goods and services. Hicks notes that in many lower income communities there is a lack of quality goods and services. For example, he cites an area in Southeast Washington, DC. “Through the advocacy of my firm and that of a corporate support manager at IHOP, Nicole Durahm-Mallory, IHOP approved a Black franchisee (a professional athlete and police officer) who opened a new restaurant in the district of the current Councilman and former DC Mayor Marion Berry, an area where there had not been a new sit down restaurant for twenty years. Because of the support of Councilman Berry and the success of that restaurant, two other family style franchise brand restaurants are slated to open in the area in the next twelve months.
Hicks points out that service/gas stations, convenience stores, car repair shops, computer repair shops, and daycare centers are examples of much needed franchise services in lower income communities. Moreover, many of these areas are now becoming gentrified, with new residents in need of service brands that they are accustomed to such as dry cleaners (Tide, 1-800-DryClean), shoe shine shops (Heel Quik), mail box and packaging services (UPS Stores), housekeeping services (Molly Maids, Home Helpers), and exterminator services (Terminix).
“So, part of your franchise selection should include researching what goods and services are needed in area neighborhoods,” adds Hicks.
4. Earning Potential: Another key consideration when selecting a franchise, much like any other investment, is how much you would like to make monetarily. Different franchises have different earning potential.
“If you are just looking to supplement your household income, then maybe you pursue a cleaning, tax, or daycare concept, a home based or part time franchise businesses,” Hicks explains. “If you are looking to replace a salary, then you may want to look at other concepts that provide greater income.”
How do you determine what a franchise makes? Several methods to do so are earnings claim statements that can be found in franchisors disclosure documents, interviews/conversations with current franchisees, and discussion boards.
To explore franchise opportunities across segments (food, service, etc.) as well as get background information, visit the International Franchise Association‘s website. The IFA’s Franchise Opportunities Directory (www.franchise.org/franchises.aspx) is a database of more than 1,100 franchise systems searchable by industry, keyword, startup cash, total investment, and other criteria.