5 Things for First Time Franchisees to Consider
with Erik Van Horn
with guest Erik Van Horn #Making Bank S4E29
Many people are attracted to the idea of running franchises. They come with prepackaged business models, a support network and an automatic customer base. They offer a great opportunity to be able to build passive income and eventually take a step back, giving you the freedom to spend more time with your family, on your hobbies, or even another career.
However, some franchises will be easier to run for a first timer than others. Not all franchises require the same level of investment in terms of both time and money, and there are many things to think about for the first time franchisee that may not be immediately apparent. A few things to consider for first time or young franchise owner include:
- The Simplicity of the Business Model
When you think franchise, it’s hard not to think fast food. The McDonalds, Subways and KFCs of the world are instant money makers if run well and placed in the right market, but fast food franchises can come with a lot of headaches.
The key here is to think about the complexity of the business model. There are a million moving parts to any food based business, but it doesn’t stop there with perishable assets. How many times have you been turned down for soft serve at a McDonalds because the ice cream machine was broken? Dealing with expensive, clunky machinery that can break is not going to be fun.
How many fast food employees have you seen who you really think were happy with their job? Employee turnover and negativity at work is almost a guarantee at any fast food location and is one of the trickiest problems to finagle.
There are many other franchises, however, where these problems are mitigated. Consider an exercise studio. In many cases there is very little equipment, and some of them are basically big, empty rooms. You have fewer employees and fewer moving pieces, meaning fewer things to think about, repair, clean, etc. You are also likely dealing with a staff and customer base that is significantly happier and less likely to cause problems.
Another popular franchise for first timers are cleaning services. That’s correct. You may not have even realized the popularity of cleaning services in the franchise world, but there are many, and they are a great option. In most cases you don’t need to have any storefront at all, and these services are always in demand in residential and commercial properties alike. The second big advantage of cleaning services brings us to #2…
2. They’re Cheap!!
Many franchises based around cleaning offices and homes can be started for under $25,000, some can go as low as $10,000. These businesses are likely going to require a bigger time commitment in the beginning, but not having to deal with paying rent for a storefront or any of the problems associated with a retail location is a huge advantage.
It will also be much easier to grow this type of business, as you won’t be limited by your square footage or foot traffic. All you need to do is establish yourself, find new customers and hire new employees.
3. Best Cities & Locations
Some cities and some neighborhoods are far more franchise friendly than others. You’ll want to find a city that has a good population, a strong economy, and preferably where other franchises have proven to be successful.
Pay attention to the culture of the city. Yoga studios may do better in Boulder, CO than Albany, NY. Opening a KFC in Nashville where you’re surrounded by real, authentic southern cooking may not be an automatic money maker. Doing your research in this area is essential and will make or break your success in any business.
4. Follow a passion or no?
A far more controversial topic than one might imagine. There are two opposing schools of thought here: the first dictates that by following your passion you will enjoy your work more, be more invested and that intrinsic motivation will help drive you to success. The second sings the exact opposite tune, that going into business following your passion will simply lead to you hating something you once loved. Therefore, you should choose something that is just a means to an end and follow it as a challenge or an intellectual pursuit, and leave the passions outside work.
No one can tell you the right path for you. You have to figure out for yourself what makes the most sense. Regardless, you need to make sure that you understand what the day-to-day life of running your franchise will be, and whether you can handle that or not.
5. Forward Thinking Franchises
Not all franchises are pushing high calories and other soul sucking corporate concepts these days. It’s perfectly possible for a forward thinking person to find a franchise that allows them to do work that actively makes the world a better place, from health to energy to going green.
groOrganic is a franchise built around creating green spaces for homes and businesses that not only create a nice environment but also produce organic, healthy food! With a rising demand for healthy living this concept is a great way to do something rewarding that also has a positive impact on your customers.
Continuing the environmentally friendly trend, there are a number of young franchises focused on helping businesses and homes become more energy efficient and save money, such as Dr. Energy Saver and Ambit Energy, among many others. Click here to check out a full list of 50 franchise opportunities focused on going green.
Franchising doesn’t necessarily have to be what you might imagine. There are an endless number of franchises in all different types of industries, many of them extremely cheap and simple enough for a young entrepreneur or first timer looking for a career change. It’s important to do the research, but if you’re committed, there’s almost definitely a great franchise opportunity for you!