If you’re interested in starting a business, and have considered franchising, you should watch this video. We interviewed Brandon Wilson with Office Pride in Huntsville, Alabama. He gave us answers to several questions we had.
Active and passive owners in franchise operations
If you’re planning to own and operate your business, you’ll be an active owner. Passive owners are looking for an investment opportunity, more so than a business to run.
What industry should you be a franchisee in?
Especially for active owner/operators, having some expertise in the subject matter is a plus. If you don’t know anything about cars, don’t start a automotive shop. However, a quality franchise operation can give you knowledge and best practices about an industry.
The International Franchise Association provides resources for you to begin your research. They have information about hundreds of industries in which you can start a franchise business.
Why join a franchise, rather than start a business by yourself?
A franchisor should give you a system for running your business. Starting a small business by yourself requires training, resources, and a steep learning curve. Franchising reduces the unknowns and gives you the benefit of their experience.
What does it cost to become a franchisee?
Franchise systems vary a lot in start-up costs. Passive owners in capital-intensive operations like restaurants may invest $500,000 or more. Brandon estimated that an owner should be prepared to invest $150,000 in a service business like Office Pride. This includes start-up cash and living expenses for the first several months. Don’t forget about capital reserves to make payroll and other expenses in the early month when you’re building your business.
What are some qualities that you should look for in a franchise system?
We talked about the qualities that make a franchise system a good fit. Company culture, franchisee support, education, and training are all part of the mix. Make sure that the franchisor isn’t just trying to “make a sale.”
If you’re looking for help evaluating a franchise opportunity, give us a call. We’ve got experience launching businesses and writing business plans. We’d like to hear about yours.