Before buying a franchise, people often tell me they want to buy a ?hot one,? meaning the most popular franchise. But I say, ?That?s the fastest way to get burned!? Eventually, ?hot? franchises turn cold, so beware of buying a franchise just because it?s trendy.
Besides, there are many important questions to ask before you buy a franchise, beginning with: ?Why do I want to buy one?? People who rush into buying franchises often discover it was the worst decision they made. That?s because their expectations and goals were incompatible with franchising, or they bought the wrong business.
Your personal satisfaction
?What will make me happy??
It doesn?t sound like a question serious business investors ask, but it?s a must-answer question before buying a franchise. Some people claim, ?If the franchise makes money, I?ll be happy,? but that?s not always true. What if you discover customers don?t like the product or service you?re selling? Or it?s too costly to keep employees? What if you have to work in the business 18 hours a day? Or you don?t get along with the franchisor? Or you don?t like the customers? How much money will it take to turn your misery into happiness? If you buy the wrong franchise, you may end up closing the business and losing your investment.
Consider time and money
Two of the most critical considerations are your time and money. How much time will you devote to your business? And how much money can you invest? Some franchises require owners to devote long hours, five or more days a week, to establish the business. Will you do that? Or should you look for a business that?s less demanding? Even if there?s no limit to your money, you still need to consider the investment. How much money can you invest? How quickly do you need to break-even and begin earning a profit?
Investment requirements
There are several costs when buying a franchise. You?ll pay a licensing fee, which usually includes training and support, plus additional expenses that may include land, a lease, equipment, inventory, materials, the cost of training employees, and start-up capital. Your total investment to open one franchise may be 20,000 to 50,000 KD. To acquire the master license rights to develop multiple outlets of an established foreign franchise, you may pay an additional 100,000 KD, plus the cost of opening each unit!
By necessity, the type of business you buy may depend on the size of your budget, which makes it all the more important to select a franchise that satisfies your expectations and goals.
Answering these critical questions will help you protect your investment. You can get a list of 92+ Questions To Ask Before You Invest In A Franchise at www.howtobuyafranchise.com. After you answer the key questions, then decide which franchise to buy. You?ll find more about that topic in future editions of this column.
How can you improve your business? Dr. John Hayes will help you discover points of opportunity. Free analysis for qualifying businesses. Send a paragraph describing your business; selected businesses may be featured in Kuwait?s My Business. Dr. Hayes has worked with an impressive international list of independent and franchised businesses. He is a professor in the College of Business at GUST. Contact him at questions@hayesworldwide.com, or via Twitter @drjohnhayes.
By Dr. John P. Hayes
local@kuwaittimes.net
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Source: http://news.kuwaittimes.net/2012/11/08/franchising-which-one-should-you-buy/
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