It’s important to inspect yourself, not just the business, before you take on a franchise
Most would-be franchisees put a lot of effort into researching different franchise models and opportunities. However, it’s also important to conduct a thorough self-assessment. Have you really got the makings of a good franchisee? If you haven’t, even the best franchise system won’t work for you.
To my mind one of the hallmarks of a successful franchisee is get-up-and-go. Running a thriving business takes long hours, total focus and a high level of drive – so energy and enthusiasm are critical.
Personal characteristics can also have a bearing on your suitability to launch and run a successful franchise. If you’re introverted by nature, ask yourself whether you’ll be able to manage this effectively in order to network, seek out new business opportunities and handle future employees. People with a quiet confidence often make the best franchisees, whereas those with a tendency for arrogance or over-confidence can be tempted to fight the system, usually to their own detriment.
Having the right personal characteristics will get you off to a good start but you also need to be sure that your family will be supportive. How will they respond to the redirection of your energy, drive and focus? Will they understand that a new franchise requires hard work and a high level of commitment? Or will they resent the fact that you may be spending less time with them?
It’s also important to think about whether you’d be prepared to relocate. There may not be an available territory with the franchise of your choice on your doorstep. Would you, your spouse and your children be prepared to move home, potentially leaving behind their own jobs, schools and friends, for the sake of your new business?
Having the temperament and family support for life as a franchisee is important. But none of this is relevant unless you can raise the finance to fund a franchise. Don’t take the plunge unless you have some financial wiggle room – rest assured you will need it.
The good news is that all major banks employ franchising teams that can advise you about funding. For a solid, reliable franchise brand you can expect funding for 70% of the total investment required. Before going to the bank, however, you need to calculate your available own funds (AOF) to ensure you can afford the 30% balance and have some working capital for the first few months' trading. Moreover, part of your AOF needs to be in cash: liquidity enables you to move more quickly and allows you to fund higher-priced franchises.
When assessing a franchise opportunity, it's not only the business that warrants close inspection but also yourself and your personal situation. Ask yourself if you have the attitude and aptitude to make it work, the financial stability to weather those early months of trading and the full support of your family, who will inevitably feel the impact of the franchise whether they’re directly involved or not.