1. Have Other Franchisees Been Successful?
Try and talk to other franchisees about their experience running the business. More often than not, you’ll find a spectrum of franchisees that are successful as well as those who weren’t as fortunate.
Nevertheless, it’s important to keep an open mind and to talk to as many experienced franchisees as possible just so that you’d get a well-rounded idea of what the franchising journey might be like for you. A diverse range of perspectives will help to shape your expectations on what’s to come.
But do take note that if a parent company is only allowing you to speak to their successful franchisees, steer clear. The truth is, a company with a successful franchise system should be happy to let you chat with any of the owners. And they should understand your motive of building a pros and cons list before starting on the business venture yourself.
A big decision like franchising requires in-depth research, just as any other important facets in your life usually do.
2. How Much Initial Capital Does the Franchise Require?
Now, it might appear common sense that cost matters, and how much capital you’re willing (and are capable) to invest is crucial before starting.
Most franchisors will require a one-time upfront fee to operate a business under their name. Safe to say that some franchises costs are less overwhelming than others. Nevertheless, make sure you have a full understanding of the amount before embarking on the franchising journey.
According to Seth Lederman, founder, and CEO of Frannexus, “One of the major causes of business failure is under-capitalization. You’ll not only need enough money to open your franchise, but also to run it until it’s profitable. Remember it’s better to start out with more money than you think you’ll need, rather than less.”
So remember, do you ultimate best to not start on the wrong foot financially. As a rule of thumb to determine how much money you’ll need, look at the upfront fees as well as the projected time frame until profitability. Then add more money to your estimate. It’s always safer to err on the side of caution after all!
3. Will Marketing Your Franchise Use a Lot of Resources?
There are certain franchises that require you to come up with your own marketing plans. With Anytime Fitness for example, we provide marketing support and a dedicated marketing team to create the promotional materials that’ll help to boost your business.
4. How Do Royalties Work?
The royalty system can vary greatly from company to company. For some franchise owners, the required amount is a percentage of the revenue and others it may be a fixed amount paid periodically regardless of revenue. Again, it’s best to discuss these matters first before starting a franchise so that you have a better idea of what needs to be paid out; when and how much.
The fixed fee royalty system can be beneficial for super successful franchise owners because they get to keep more of their profits. For others, however, this system might cause a bit of a struggle for them to meet their required fees during periods of low profit. Although the risk in this situation is higher, the potential return might be just as great.
5. What Is the Market Like in Your Region?
When looking into starting a franchise, it’s important to look into market trends and opportunities in the region here you plan to start a franchise. Basically, researching the area demographic as well as existing competitors nearby is crucial to understanding how to market your business (and if it’s a suitable area for exponential growth in the long run).
CONCLUSION
Whether you’re a seasoned business owner, or someone who’s starting out with this venture for the first time, it’s without a doubt that franchising contributes greatly to the economy due to its proven business model.
Your chances of success are much better working with a franchise than if you were to start from scratch.
If you’re ready to turn your PASSION into PROFITS with Anytime Fitness, then let’s connect today so that I can walk you through the process step-by-step.