Investing your money in a franchise is a huge financial decision. You need to take into account many things when choosing the right franchise and it could be daunting. Even if you’re looking to purchase a proven model, you don’t really know if it would work in the location you want to put it.
Jenny Craig notes that whether you’re looking to invest in a wellness franchise or a food franchise, to start you on the right path to success, avoid these common pitfalls newbie franchisees make:
Thinking You’ll Be the Perfect Franchisee
One of the most important things to know before you buy a franchise is that it is an extremely strict, system-based model. This means that it’s perfect for those who follow rules to a tee. So if you’re not sure that you could comply with all the franchisor’s rules then think twice before you commit.
Purchasing a Trendy Franchise
Plenty of prospective franchisees opt for trendy or “in” franchises. However, the popularity of a franchise isn’t the best indicator of its success because ultimately, it’s how you’ll run the franchise that really matters.
But this isn’t to say that a trendy franchise won’t make you money. Put simply, when choosing a franchise, look at its history as well as other factors including cost vs. profit, longevity, and so on.
Not Knowing What You Can Afford
Knowing your net worth could go a long way toward helping you decide if you could really afford to invest in a franchise at this time. In general, your net worth should be around $300,000, with $50,000 of that being liquid.
In the event that your net worth is not up there, then you need to consider other ways, such as small business loans, of funding your investment.
Not Doing Your Due Diligence
This cannot be stressed enough; get ready to do some serious research if you want to find the right franchise to invest in, all while increasing your chances of success and reducing risk.
The best way to go about your research is to talk with actual franchisees of the particular franchise brand you’re eyeing because they already have ample experience.
Put simply, when trying to find the most ideal franchise to invest in, do the proper research and work prior to making a commitment. And of course, work hard, follow the franchise’s business model, and avoid the mistakes mentioned above.