Was one of your New Year’s resolutions to start your own business? If so, the opportunity to turn that dream into reality could be closer than you think with franchising.
Franchising allows you to step into the entrepreneurial world with the backing of a trusted brand, proven systems, and ongoing support. Whether you’re working with a modest budget or ready to make a significant investment, there’s a franchise to suit nearly every financial situation.
That said, success in franchising isn’t just about picking a business within your price range. It’s about aligning the franchise with your goals, understanding the total costs, and preparing for the challenges ahead.
In this article, I’ll share five key considerations for starting a franchise that fits your budget while setting you up for long-term success.
- Understanding Your Financial Capacity
Franchises come in all shapes, sizes, and price ranges, which is why clarity on your financial capacity is the first step. There’s no point teasing yourself with the thoughts of owning a major fast-food restaurant initially, when a mobile services business may be more within your reach.
- Low-Cost Franchises: Investments between $10,000 and $50,000, often for mobile services or home-based businesses with minimal overheads.
- Mid-Tier Franchises: Ranging from $50,000 to $250,000, typically covering sectors like boutique fitness, food trucks, or retail.
- High-Investment Franchises: $250,000 and above, including major fast-food chains and premium retail stores.
Remember, the initial franchise investment is only part of the financial picture. Factor in setup costs, ongoing royalties, marketing contributions, and working capital. Align these costs with your financial goals. Are you looking to supplement your income, become your own boss, or create a thriving, scalable enterprise? Clarity here can make or break your decision.
- Selecting the Right Franchise for You
Once you’ve set your budget, narrow down your options to franchises that align with your interests and goals. Just because you can afford a type of franchise, doesn’t make it the right choice. The right choice is the franchise that aligns with your passions, values, and has market demand.
- Food & Beverage: From coffee carts to gourmet restaurants, food franchises cater to a range of budgets and tastes (pardon the pun ☺).
- Education: Learning centres and tutoring businesses are booming, often falling within the mid-tier range.
- Service-Based Businesses: Pest control, cleaning, or repair services are often low-cost, high-demand opportunities.
Buying a franchise is a big decision, therefore select a franchise that you can bound out of bed for, even on those (inevitable) challenging days. Research thoroughly and ask, “Can I see myself growing this franchise over the long term?”
- Leverage the Power of Support and Training
One of the greatest advantages of franchising is the built-in support. When evaluating opportunities, consider the quality of the franchisor’s systems:
- Comprehensive Training: Does the franchisor equip you with the knowledge to be technically proficient and run your franchise effectively? Running a successful franchise is different to being skilled at a particular task.
- Marketing Support: How will they help you attract and retain customers? Generating demand is the biggest opportunity as most new franchises start with zero customers.
- Operational Guidance: Are there systems to streamline day-to-day management and operations?
Support doesn’t end with onboarding. Many franchisors offer ongoing development programs, which are invaluable as your franchise scales. By choosing a franchise model that invests in the growth of its franchisees, you will reap the rewards and benefits over time.
- Assessing Growth Potential
Whilst a number of franchisees want to buy a lifestyle business, there are others who want more than a job, instead seeing a franchise as a springboard for growth. If you are one of the latter then it’s important that you evaluate the scalability of your chosen franchise:
- Multiple Revenue Streams: Can you diversify your offerings to increase income?
- Market Expansion: How easy is it to grow your customer base, hire staff, or open additional locations?
- Brand Strength: Does the franchise have a solid reputation that supports scalability?
Growth requires preparation. Many successful franchisees invest in business coaching or advanced training to develop their leadership, marketing, sales, and business acumen, enabling them to tackle challenges and seize new opportunities effectively.
- Conducting Due Diligence
Finally, thorough research is non-negotiable. Before signing on the dotted line, do your homework:
- Speak with existing franchisees to gain insights into their experiences, profitability, and challenges.
- Review the franchisor’s financial performance and the average earnings of franchisees.
- Identify red flags, such as high franchisee turnover (Not money. Franchisees leaving the group) or vague profitability claims.
- Seek independent advice. Create your ‘A’ team of professionals around you, i.e. lawyer, accountant, commercial broker, financial planner.
Be patient! While the allure of owning your own franchise can be exciting, the costs of rushing into the wrong opportunity can be significant. This is where a comprehensive due diligence process is imperative.
Summary
Franchising is a fantastic pathway to business ownership, offering the safety net of an established system while allowing you to build something of your own. By carefully considering your financial capacity, aligning with the right franchise, and leveraging available support, you can set yourself up for sustainable success. Remember, the franchisor provides the system, but your success ultimately hinges on your ability to follow this system and trust the process.
Whether you’re exploring your first franchise or looking to expand your portfolio, the journey is yours to shape. With the right tools and mindset, franchising can be more than just a business, it can be the foundation for a thriving future.
About Tony Meredith
Tony Meredith Coaching focuses on helping business owners Grow Sales, Increase Profits, and Regain Time.
Tony Meredith Coaching has worked with thousands of businesses across Australia since 2018, helping them achieve outstanding results in franchising, retail, services, manufacturing, and trades. With over 25 years of experience in senior sales and leadership roles, Tony and his team are your partners in business success.
- Email: info@tonymeredithcoaching.com.au
- Website: tonymeredithcoaching.com.au
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