5 Must-know Things for First-time Franchise Owners

A group of people holding the Franchise written speech bubbleOver the past couple of years, franchises grew by more than 2% annually as opposed to businesses starting from scratch. The benefits of a franchise, especially for first-time business owners, are incomparable. It already has a well-known brand. It has a system you only need to follow. You don’t have to worry about research and development.

However, although there are a lot of tutoring franchise opportunities, that does not necessarily mean this is the kind of business that you should enter into. Choosing a franchise is more than just about what’s available. Rather, it’s about what you are passionate about, what you can afford, and most importantly, what sells.

The Franchise Costs

The franchise fee is not the only thing you would have to prepare for. You would need to shoulder the expenses that the business would incur in the first few months, especially the capital inventory, the salary of the workers, and the rent and utility bills. Moreover, you would have to spend on the construction of the store and the maintenance of the physical structure. How much money do you need? It depends on the kind of franchise you are planning to buy. A food cart business is cheaper and is low-maintenance, but a café and a restaurant would require five or more people and a bigger space.

Your Interests and Passion

It is true that people who love their jobs or their businesses do not have to work a day in their lives. That’s because they love what they do. It doesn’t feel like work at all. Find something that you’re passionate about because running a business will take a lot of time and energy. It is not an easy feat that you should take on if you are not interested in what you are selling. You should believe in your products as well. Buying a franchise just because it is trendy is not the best reason for investment.

The Franchisor

Not all franchisors are alike. Some are better at handling their franchisors, while others are neglectful as long as the orders for products keep coming in. Do your due diligence as much as you can about the business. Ask to meet the franchisor and get a feel of their personality in real life. Get information on how long the business has been in the industry, the average success rate of franchises, and how long the franchisees stay with them.

Return on Investment

First and foremost, every business seeks to reach a return on investment (ROI) as early as possible. Once the ROI has been met, this means that all income derived from the business will become a cash flow of profit. How much time does it take for the franchise business to reach ROI? To get an idea, you must first compute how much you need to spend for every item, including the operational costs, and how much it will be sold. The difference is your profit margin. You may want to aim for businesses that offer a higher profit margin.

Social Media

Social media windows on monitor

It may surprise you to think that businesses are dependent on social media for success, but that is an indisputable truth in today’s business environment. Businesses that can be marketed on social media have a higher chance of success. Choose a franchise business that’s easy to promote on Facebook and Instagram for a fighting chance to be successful in this industry.

Before you get into any business, it is important to speak to an expert—whether a trusted friend who has been running his own business for years, a financial advisor, or someone whose opinions you trust. Getting into a business is not a foolproof way for early retirement. It is a delicate matter as one wrong move can be disastrous to your future plans.

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