Is Owning a Franchise Risky Business?
December 16, 2014
by Leslie Kuban
When Fran and Michael Rickard, the mother-and-son duo behind Big Frog garment customization in Marietta, began evaluating risks, they carefully considered
all the “worst case scenarios” involved with opening up a family franchise business. Through their due diligence process, it became clear that the
riskier move would be not to open one.
The Rickard family is a shining example of how a commitment to doing your homework will ensure that what is unchartered and new; can be well executed
according to plan. In fact, this is exactly why so many prospective business owners choose franchising; that plan has already been developed, tested,
improved and repeated.
The driver was about securing a business future for myself.
5 Steps to Minimizing Risk
- Commit to a proper process of due diligence. Since franchising became regulated and governed by the Federal Trade Commission, the
curtain has been pulled back and transparency exists. Sorting through the clutter to gain an understanding much of what is unknown becomes known
and reduces the perception of feeling risky.
- Keep and Open Mind. There are more than 3500 franchise brands and franchising is so much more than burgers and fries. If you train
yourself set aside your knee jerk positive and negative reactions to business ideas, the process of finding a great franchise that is great for
you becomes a whole lot more fun and increases your chances of landing in one that offers you a greater chance to succeed.
- Engage with other franchise owners. One of the best arguments for franchise ownership is the buy-in to the team. Most will tell you
that they network with other owners for best practices, support, new ideas and friendship. If you approach them correctly, they will tell you the
good, the bad and the ugly about what it’s like to own that franchise to help you in determining if it’s going to a good choice for you.
- Understand how your skills translate into running a business. Unless you have been living under a rock, you have skills and traits
that will apply beautifully to some - but not all - franchise business options. By determining what skills are needed to operate and grow the franchise
models you are learning about, and then being honest with yourself about having those particular skills or being able to learn them quickly is
a great way to tremendously reduce risk. If you are great at sales and business development, a business services franchise will likely leverage
those skills best. If you are a management operations type, something in home services may be more your cup of tea.
- Start by finding the right consultant to act as a guide through all of these steps. While there are some questions that will
only be answered on the other side of the decision to move forward in committing to own that franchise business, there are many that can be addressed
to a high degree of understanding IF you know what questions to ask and how to go about it. Following the process, asking the right questions and
keeping and open mind take franchises from a risky business to a calculated risk poised for success.
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