Many people believe that owning a franchise offers the most direct path to business ownership and growth. However, buying into a franchise involves a long and detailed process, as well as significant costs. While a franchise brand may be established, the business model may set you up for failure rather than success. Here are the top five tips to help you launch a winning franchise and avoid common mistakes:
Choose Wisely. Think franchises are less prone to failure? Think again! According to Forbes, some franchises have failure rates as high as 80 to 90 percent. Research your business of interest carefully before opting in. A good place to start is with the Franchise Disclosure Document, or FDD, which includes vital information on everything from a franchise company’s earnings claims to financial statements to bankruptcy information.
Talk to Franchisees. What better way to estimate your prospects than grilling existing franchisees? Talk to several different franchisees for help establishing the financial reality of opening, running, and making money from a unit; learn what it takes to be successful in the business; and gauge the level of support you can expect from the franchisor.
Realize Your Limits. Many people go into business to be their own boss, but this motivation may not be fully realized in a franchise setting. Buying into a franchise means following a franchisor’s lead and maintaining uniformity with the chain. Realize, too, that in many respects, the franchisor calls the shots and may still succeed if franchisees fail.
Favor Tried-and-True over Trendy. Think you’ve found the next big thing in weight loss, travel, or skin care? Franchises cover a boggling range of products and services, and many would-be entrepreneurs latch on to trendy new franchise opportunities. According to Forbes, however, it’s best to do the opposite and find a business that’s been proven over the long run across different economic climates.
Choose the Right POS. To grow your network, it’s critical to have a POS system that helps you gauge how well your business is performing. Requirements should include a real-time view of sales, inventory, staff targets, and customer data. Your POS should be easy to use as well as replicate. Revel’s is the only iPad POS that’s franchise-ready, offering centralized management tools you need to monitor all your locations.
Smoothie King Franchises Inc. evaluated two dozen POS systems before settling on Revel for our secure architecture, mobile payment capabilities, including the support of Apple Pay, sophisticated reporting capabilities, and new loyalty rewards plans.