Investing in a franchise is a big decision, and one that requires thorough research and preparation. It is important to carefully consider all the aspects involved in franchising, including the financial commitment, strategic goals, and operational requirements. Recently retired individuals may find the process of selecting, financing, and running a franchise particularly challenging. To help the process, here are some frequently asked questions (FAQs) that someone considering an affordable franchise should ask.
What is my budget?
Your budget will influence many aspects of the decision-making process, and it is important to get a firm understanding of your financial resources when looking to buy a franchise. Depending on the brand and business model, the cost of opening a franchise can range from thousands to millions of dollars. Before entering into lengthy discussions with franchisors, it is important to determine a realistic budget and know your limits.
What type of franchise is best for my needs?
The type of franchise you select will also influence the complexity and cost of the purchase. Some of the most popular franchise types for recently retired people are staffing, retail, restaurants, professional services, and home-based businesses. Make sure to understand the differences between the different types and consider their pros and cons before making a decision.
What is the total cost of opening a franchise?
Franchise costs can vary greatly from brand to brand. The upfront cost of opening a franchise typically includes the franchise fee, costs of building improvements, equipment, training, advertising, and other operational needs. Additionally, you may be required to pay ongoing or quarterly fees, which can range from a few hundred to thousands of dollars. Understand what is required and factor it into your overall budget.
What financing options are available?
Once you have narrowed down your list of potential franchises, it is time to find out about financing options. The Franchise Owners Association and other organizations can provide assistance in finding financing programs, as well as provide guidance in understanding franchise disclosure documents. Additionally, you can look into government-backed loan programs, private equity investments, and crowd-funding initiatives to align your financing needs with your franchise purchase.
How much experience do I need?
The amount of experience required to run a franchise can vary, but most franchisors will require that you have some prior background in business. Additionally, most will require that you follow the franchisor’s systems and processes. Understanding the franchisor’s expectations will help you determine if you have the qualifications to be an effective franchisee.
How much time and effort am I willing to put into the business?
Running a franchise requires a lot of time and effort, so it is important to make sure you are ready and willing to commit to the responsibilities of owning a business. Ultimately, you should consider how much time you can spend on the business, be it full-time or part-time, so you can create a plan of action that includes strategies for growth and sustainability.
What kind of lifestyle will I have?
When looking to buy a franchise, many people think about the lifestyle they will have in retirement. Consider the realities of commitment, both emotionally and financially, as well as the anticipated return on investment for the franchise that you are considering. This return could vary greatly, so understanding your wants and needs and what the franchise will offer can help you make a wise investment.
Are there any resources available to help me?
Approaching a purchase as large as a franchise can be daunting, so it is important to find reliable resources to help you through the process. The IFPG is a membership-based franchise consulting network with more than 1,300 franchisors, franchise consultants and vendor members. Our franchise brokers are available to answer questions, provide advice, and help you find the perfect franchise for your goals and budget.