If you’ve ever dreamed of being your own boss, owning a franchise can be an effective way to start to a business. From fast food restaurants to fitness and spa centers, there are more than 700,000 franchises in the U.S. alone, offering instant brand recognition and a built-in customer base.
Could owning a franchise be right for you? Here are 5 important things to think about before you sign on the dotted line.
5 Things to consider before you invest
Location, location, location!
Find out about the other businesses and franchises in the area where your franchise will be located. Are they offering the same kind products and services? Too much competition may result in too little demand for your franchisor’s products or services.
Support from your corporate franchisor
Franchisors also provide support to help you run your business successfully. Ask about training programs, administrative and/or technical support, advertising, signage, and other assistance you’ll receive.
Your management skills and expertise
Are you cut out to be a franchisee? Aside from putting in long hours, you may need to hire and manage employees, build customer relationships, and oversee the day to day operations of the business. Be sure you have the right skills and experience to be successful.
Expenses you’ll be responsible for
Franchise-related fees vary widely, so be sure to find out exactly what you’re responsible for. In addition to the initial franchise fee, you may have to pay for rent, inventory, operating licenses and insurance, franchisor royalties, and advertising fees.
Profitability and sustainability
You may want to verify that your franchise will generate the revenue and profit you need to make a living today, and achieve financial security over the long-term. Look for franchises that have been in business for a decade or longer, or that have great growth potential.
A word about financing
If you’ve done your homework and ready to take the next step, you may want to look at some financing options. Check with your franchisor first. Some offer full or partial financing to franchise start-ups. For bank loans, you may want to choose a bank that offers loans guaranteed by Small Business Administration (SBA) loans. These types of loans are much more likely to get approved. We speak from experience as the number one SBA lender in New England ranked by dollar amount, according to the Small Business Administration.
There are many other financing options available, so do your research. For example, start here. That way, you’ll be ready when the right franchising opportunity comes along!
Start a conversation with us today, and we’ll connect you with an expert who can help you reach your goals with specialized support and product recommendations. And be sure to visit us at The Franchise Show, January 11-12, 2019, in Boston.
The opinions and views in this blog post are those of the authors, and are not intended to provide specific advice or recommendations for any individual. Please consult your tax advisor regarding your individual situation. All loans and lines of credit are subject to credit approval. The Webster symbol is a registered trademark in the U.S. Webster Bank, N.A. Member FDIC.
© 2019 Webster Financial Corporation. All rights reserved.