With corporate layoffs becoming an increasingly common occurrence due to the economic impacts of the pandemic, many now-unemployed people are looking into franchise opportunities to help them create a successful and sustainable business in 2021 and beyond. Research indicates that 9 out of 10 small business franchises are still flourishing in spite of the current climate. This encouraging news prompted us to take an in-depth look at some of the most frequently asked questions that entrepreneurs have regarding opening a franchise.
The International Franchise Professionals Group (IFPG), is an organization that is proven to provide assistance to those seeking franchise knowledge and support. Comprised of more than 1,300 franchisors, franchise consultants and vendor members, the IFPG guides aspiring business owners through the process of identifying and investing into franchise businesses with a purpose-driven mission based on integrity, ethics and collaboration.
So, what are some of the most commonly asked questions when it comes to franchising, and what do the answers to them mean for entrepreneurs? Read on for our look into this informative world of franchising, bolstered with thought-provoking advice from experts at the IFPG.
Can You Buy a Franchise with No Money?
This is a legitimate question posed by many people wanting to start a franchise business, but the answer is no. Although there are various opportunities out there to put forth less investment initially, you will still need to provide some capital to get the franchise off the ground. The IFPG suggests creating a plan to allocate funds from other sources, such as by utilizing a loan, making an investment, or raising capital from other investors. It’s vital to strongly consider how this influx of money will affect the success of the long-term project.
How Can You Find the Right Franchise for You?
Franchising experts often encourage would-be franchise owners to go through a combo of the self-assessment and due diligence process before making an investment. Start by reflecting on yourself and what type of franchise would coincide with your skills, expertise, and overall goals. Research franchisors and get to know the industry before signing any papers. Conduct due diligence and make sure to talk to the franchisor as much as possible.
The IFPG notes that fully understanding the difference between a franchise and a business opportunity is essential to franchising. Potential franchise owners should also be sure to manage expectations and remember to be aware of the actual costs associated with the process.
What Are the Benefits Of Franchising?
The IFPG points out that there are many advantages associated with owning a franchise. These include something like having the support of an established brand and concept, gaining access to resources for business operations, and being able to attract customers with an already recognizable name. Furthermore, depending on the type of franchise you decide to invest in, you could also benefit from working with a proven system that is backed by years of success. These all give you great leverage than if you decided to open up a business on your own.
What Are the Disadvantages of Franchising?
Just as there are advantages to franchising, there are definitely some drawbacks. For instance, with the majority of franchise opportunities you have little to no control over product prices and you are limited by the franchisor’s rules and regulations. You also will likely have to be ready to invest continued income into the franchise after you’ve purchased it in order to succeed.
Is Investing in Franchises Worth the Risk?
The IFPG states that the risk of owning and operating a franchise can depend on the business you decide to invest in. In order to create a successful franchise, the right research and due diligence is essential. The more knowledgeable you become about the process of opening a franchise, the better chance you have of eliminating any pitfalls you may face.