When is The Right Time To Buy a Franchise?
8 Indicators That You Are Ready to Become a Franchisee
When it comes to making a major life decision like starting your own business, there is never a perfect time to take the leap. The same goes for becoming a franchise operator.
Becoming a franchise operator is a big decision that requires a significant amount of responsibility and financial investment. So, whether you feel fully ready or you aren’t sure if now is the right time, there are certain factors you should consider before investing in a franchise.
In this article, we will explore the topic of timing and how to know when is the right time to buy a franchise.
What Does it Mean to Be a Franchise Operator?
A franchise operator, also known as a franchisee, is a business owner that operates their business under the name and branding of a larger corporation, known as a franchisor. The franchisor must follow all of the franchisor’s branding, marketing, and operational guidelines and will receive training and support to help ensure the franchise is successful. In exchange, the franchisee will pay the franchisor a franchise fee and ongoing royalty fees for the duration of the franchise term.
The amount of support and training you receive, along with the required fees, recommendations and guidelines are different from franchisor to franchisor and will be outlined in your franchise agreement.
Factors that Indicate Whether You Are Ready to Buy a Franchise
While there’s always at least one reason for putting off a big event like purchasing a franchise, there are several more reasons you should be starting your own franchise business right now.
Below, we have listed some of the main indicators that you are ready to become a franchise operator.
You Have Enough Funds to Cover Startup Costs
Starting a franchise requires a significant financial investment. The startup costs required for starting a franchise typically range from $100,000 to $300,000 and are dependent on the following factors:
- The franchisor you decide to partner with
- How much your franchise fees are
- The royalty fees determined by the franchisor
- How much capital you’re starting with
If you don’t have the funds to pay your startup costs upfront, you will need to obtain a business loan from a financial institution. Fortunately, obtaining a business loan as a franchisee tends to be easier than if you were starting your own business from the ground up. The reason for this is that franchises come with existing brand recognition and carry less risk than other types of businesses.
You Are Comfortable With Taking On The Risk
As with any business, starting a franchise is a big risk. While franchises carry significantly less risk than other business models, there is some unpredictability that you need to be prepared for.
If you have weighed the pros and cons and are prepared for the possibility that your business may not be as profitable as you hoped, you are ready to take on the risk of running a franchise.
You’re Buying a Franchise For the Right Reasons
Being a franchise operator offers numerous benefits such as financial stability and a flexible work schedule. However, these benefits shouldn’t be the only reason you decide to start your own franchise.
You should be passionate about your business and be its biggest cheerleader so your staff will feel motivated to work every day.
You Have a Location in Mind
Before you can start your franchise, you need to have a location secured. Before settling on a location, though, you’ll need to do market research and determine whether there is a demand for your franchise in that area. Also consider whether there are other businesses under the same franchise in this location. If you have already done all of the work to find the perfect location, you’re one step closer to being ready to become a franchisee.
You Have Previous Business Experience
While a franchisor may not require its potential franchisees to have previous experience owning a business, it will provide you with a significant advantage.
If you’ve already owned or managed a business, you will be better equipped to handle the curveballs that will inevitably be thrown your way.
You Understand What it Means to Operate a Franchise
Being a franchise operator is a major responsibility. While the franchisor will provide you with training and guidelines to follow, you will still be responsible for:
- Hiring and managing your staff
- Managing the finances of the business
- Marketing and advertising the business
- Driving customers into your business
- Making sure the business is successful
You’ve Researched Different Franchisors
Before investing with a particular franchisor, it’s important to review several options and consider the following:
- The length of the franchise term
- Required franchise and royalty fees
- How much support and training the franchisor offers
- What are the terms of the franchise agreement?
- How many years the franchisor has been in business for
- How many franchises already exist in your area
- Does the franchise have a strong track record when it comes to successful franchises?
- Has the franchise been involved in lots of litigation?
- How many other franchisees there are
If you’ve only looked at one franchisor and have not considered any of the points listed above, you may not be ready to purchase a franchise.
You’re Considering Partnering With Gorilla Bins
If you are looking to buy a franchise and feel you are ready for this big step but have not found the right franchisor to partner with, consider working with Gorilla Bins.
Gorilla Bins is Ontario’s leading waste management franchisor with several locations across the Greater Toronto Area.
Gorilla Bins offers its franchisees lots of training and support to help them be successful. We also have a track record of producing successful franchisees and have tripled our revenue over the past five years.
Get in touch with our team today to learn more about Gorilla Bins and how we can help set your franchise up for success.