Return to 143 articles to start your own home based business opportunity directory IS FRANCHISING FOR ME? - IS FRANCHISING FOR YOU? As with any business, the first step in determining whether or not to enter into the venture is to assess your reasons for going into business. If you feel you need a change, or you're tired of having other people tell you what to do, then you should reassess your decision before investing your time, money and energy because operating a business requires more than a need for a change, or the desire to do as you please. Purchasing a franchise like any other business requires a total commitment of your time, energy and financial resources. If you are not prepared to invest these qualities and resources into your franchise, then you should stop at this point. EVALUATING YOUR SKILLS AND EXPERIENCE Identify Your Reasons As a first and often overlooked step, ask yourself why you want to purchase a franchise. This question, although basic, is an excellent way of evaluating your reasons for going into business. List every reason you identify, no matter how farfetched it may seem. Divide your list into two separate components. Separate the viable reasons from the trivial reasons and categorize them accordingly. It isn't unusual for reasons to range from the desire to be your own boss to the desire to be a billionaire. Whatever your reasons, remember that your future is at stake so try to be objective. Your checklist should include reasons such as these (check each that applies to you): YES * Freedom from the 9-5 daily work routine ____ * Being your own boss ____ * Doing what you want when you want to do it ____ * Improving your standard of living ____ * Bored with your present job ____ * Have a product or service for which there is a demand ____ Some reasons are better than others, none are wrong; however, be aware of tradeoffs. For example, you can escape the 9-5 daily routine, but you may replace it with a 6 a.m. to 10 p.m. routine. After assessing your reasons for going into business, next conduct a self analysis to determine if you possess the personal characteristics needed to be a successful franchise owner. Consider questions such as: Personal Characteristics YES NO 1. Are you a leader? ___ ___ 2. Do you like to make your own decisions? ___ ___ 3. Do others turn to you for help in making decisions? ___ ___ 4. Are you willing to accept managerial assistance from the franchisor? ___ ___ 5. Are you willing to comply with the provisions outlined in the franchise contract? ___ ___ 6. Do you enjoy competition? ___ ___ 7. Do you have will power and self discipline? ___ ___ 8. Do you plan ahead? ___ ___ 9. Do you like people? ___ ___ 10. Do you get along well with others? ___ ___ Personal Conditions These questions cover the physical, emotional and financial strains you will encounter operating a franchise. YES NO 1. Are you aware that running your own franchise will require working 12-16 hours a day, six days a week, and maybe even on Sundays and holidays? ___ ___ 2. Do you have the physical stamina to handle the work load and schedule? ___ ___ 3. Do you have the emotional strength to withstand the strain? ___ ___ 4. Are you prepared, if needed, to temporarily lower your standard of living until your franchise is firmly established?___ ___ 5. Is your family willing to go along with the strains they, too, must bear? ___ ___ 6. Are your prepared to invest, and possibly lose, your savings? ___ ___ Answering "yes" to any of these questions means that you have some of the skills needed to operate a successful franchise; a negative answer means that you may have to acquire these skills or hire personnel to supply them. Experience Certain skills and experience are critical to the success of a business. Since it is unlikely that you possess all the skills and experience needed, you'll need to hire personnel to supply those you lack. There are some basic and special skills you will need for the particular franchise you purchase. By answering the following questions, you can identify the skills you possess and those you lack (i.e., your strengths and weaknesses). YES NO 1. Do you know what basic skills you will need to operate a successful franchise? ___ ___ 2. Do you possess those skills? ___ ___ 3. When hiring personnel, will you be able to determine if the applicants' skills meet the requirements for the positions you are filling? ___ ___ 4. Have you ever worked in a managerial or supervisory capacity? ___ ___ 5. Have you ever worked in a business similar to the franchise you want to purchase? ___ ___ 6. Have you had any business training in school? ___ ___ 7. If you discover that you don't have the basic skills needed for your franchise will you be willing to delay your plans until you've acquired the necessary skills? ___ ___ When you complete your self-analysis, discuss your results with your family and financial advisor. Their feedback can help you make the right decision. If you all agree that you have most of the skills needed to operate a successful franchise, then you should feel comfortable proceeding with your plans. If, however, they feel you lack most of these skills, then you may need to consider delaying your plans until you are better prepared. Above all, be honest and objective with yourself; after all, it is your future. A more detailed self-analysis, the "Small Business Entrepreneur's Checklist," is located in Appendix I. This checklist is designed to assist you in determining what you actually know about operating a business, and the skills you will need to do so. Review it carefully before deciding whether or not to purchase a franchise or to go into business. If you discover that you lack many of the skills needed to operate a successful franchise, you may need to take some training courses or hire personnel to compensate for these deficiencies. Once you are certain that your reasons for going into business and the franchise you've selected are viable, gather the information that you will need to make an informed decision from sources, such as: 1) a directory of franchises, e.g., the Franchise Opportunities Handbook (published by the U.S. Department of Commerce), 2) the disclosure document, 3) current franchisees, 4) other references, such as U.S. Small Business Administration (SBA), Federal Trade Commission (FTC), Better Business Bureau, local chambers of commerce and 5) professional advisors. Many new small business owners choose franchising over starting a new business because it provides easy access to an established product, reduces many of the risks involved in opening a new business, provides access to proven marketing methods and in some instances provides assistance in obtaining start-up capital from financing sources. Franchising can be advantageous as well as disadvantageous to both the franchisee and franchisor. A few of the advantages and disadvantages are listed below. Study these factors carefully before choosing the franchise option. FRANCHISEE Advantages Disadvantages - established product - failed expectations or service - technical & managerial - service costs assistance - quality control - overdependence standards - less operating capital - restrictions on freedom of ownership - opportunities for growth - termination of - territorial franchisee agreement right of subfranchisees - operating franchisee - performance of no rights other franchisees FRANCHISOR Advantages Disadvantages - expansion - company-owned vs - limited risk franchised units - limited capital - equity investment - motivation - problems with franchisee highly motivated recruitment - operation of non-union business - communication - bulk purchasing - freedom - cooperative advertising

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