By Ed Charkow
Expert Author
Deciding to start your own franchise is just one of the first steps to getting started. Buying a franchise is a lot like dating. You and the company have to be a good fit. The company you are considering starting a franchise with must fit your needs, and you must meet the guidelines they have set up.
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You may be thinking, “I have the money, I will just sign up and get started. ” It’s just not that easy. The companies want to make sure you will be successful and a large part of that will come in the form of discussions, questions, paperwork, and if you’re still both attracted to each other – FINAL APPROVAL!
Chances are if you’re a true entrepreneurial spirit, your nature won’t be right for most franchisors. Franchisors want you to be able to follow a system that they have proven to be successful. A good example of this is “the golden arches”. You won’t ever go into one that doesn’t follow the rules and guidelines set down by the franchisors. They may for a little while, but they will and can lose their franchise license. There isn’t room for innovation in franchise companies. They don’t want someone to cause any trouble and rock the boat on their proven business systems.
If you’re capable of following a PROVEN system for business success you will be a good franchise owner though. There will still be thousands of questions and they are looking for a specific type of person.
The franchisors want someone with an entrepreneurial spirit to be self sufficient, but with out enough free spirit to re-invent the wheel. The companies usually prefer you to have some management experience or extensive experience in the field.
Your personality is the next thing that will be reviewed on your “date” with the franchise company. If your wishy-washy and don’t know what you want, you can probably count on this being your last date with that company.
Just like when you meet a new prospective person to date, you check out their outfits, car, etc. . . You don’t want to end up dating a beach bum right? Well the franchisors don’t want to be dating someone who doesn’t meet their financial guidelines. If you’re planning on borrowing the funds to start the franchise, you may have a rude awakening. Even if your credit is good, and you qualify for a home equity loan, you may find the bank will not lend it to you for starting a business.
Make sure you have your finances in order. Prepare a financial statement that includes your net worth, and what assets are able to be turned into cash in a decent amount of time. Franchisors are going to home in on your net worth and liquidity before anything else. Having cash on hand is much more important that having the ability to borrow funds. Financing debt on other debt is not attractive to many franchisors.
The franchisors will also look at your marketing skills, and your ability to work the schedule the franchise takes to run. If you are used to working a normal 8 to 4 job and suddenly find yourself having to be at “work” 7 days a week it WILL affect your life.
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