There are lots of benefits of working for someone else. Regular wages, paid holidays, set working hours and generally less stress. But there are some downsides too. You don't have complete control over your destiny, you may not be paid what you think you're worth and you have to answer to someone else.
Why buy a franchise?
If you’re ready for a change, then buying a franchise could be the solution you're looking for. You get the independence of small business ownership, with the support of a significant business network that has a proven track record of success. This all sounds good, but how do you know if you're ready to make the transition from employee to franchisee?
>> Read more:
- You're Never Too Young to Become a Franchisee
- Become a Franchisee: What All First-Time Franchisees Should Know
- 3 key traits of a successful franchisee
- Five Great Reasons to Become a Franchisee
- Are you ready to become a franchisee? Check out our checklist
- Top 10 things you should know before you become a franchisee
Is a franchisee and entrepreneur the same thing?
A franchisee can be referred to as an entrepreneur because they have the initiative and motivation to push forward a business venture. Whether they offer a product or service, run a solo operation or a franchise, entrepreneurs take risks and are the driving force of commerce.
However, there is some ambiguity with the two terms. Not all entrepreneurs are franchisees, as they can also operate as a sole proprietor or partner. Also, it is believed by some that only the individual that developed the franchise concept can be referred to as the entrepreneur, because a franchisee is buying into an already established business system. But, considering that franchisees are in charge of the day-to-day operation of the franchise and carry out much of the same responsibilities as entrepreneurs, for the purpose of this article we will refer to the two terms interchangeably.
Employee to Entrepreneur: The 10 Steps
Before you jump straight into deciding which franchise is best for you, here are 10 tips to help make the transition as smooth as possible:
1. Think about why you’re doing it
Before you even start considering which franchise is the best fit for you, you need to do some research on yourself. If you don't know what it is you want to achieve from franchising, it can be challenging to find the perfect franchise business.
Start by giving some thought to what you want to get out of buying a franchise. It could be one of many reasons. For example, do you plan to continue to work as an employee while you run your franchise business as a hobby? Is this going to be your primary source of income or just a way of earning a bit extra? Do you eventually want to own more than one franchise?
Only when you can honestly answer these questions will you be able to select the right type of franchise to allow you to achieve your desired outcomes.
We have plenty of home-based franchises on our books at the moment if you want to avoid tackling the dreaded commute and operate alongside another job or family commitments. These include Choice Home Tutoring and Nationwide Cleaners. Or, if you’re tired of sitting at a desk all day and want a job that gets you out and about and in different areas, then why not start a van-based franchise? You could opt for ChipsAway or Countrywide Signs.
2. Check you have sufficient funds
Do you understand how much you can afford to invest? You might have your heart set on opening a particular type of business, but it may be unrealistic when you consider your budget compared to the average investment costs in that sector. Even when you do have a better idea of what franchises are in your price range, remember that it’s very unlikely that you’ll start to make a profit from day one. Even successful franchises take a while to become profitable, so plan to have enough working capital to live off while you get off the ground.
3. Use your existing skills and expertise
Think about what you’re good at. Weigh up your skills, previous experiences and what you have a passion for. Although it can help to have the right skillset to run successful franchises, it’s not always a requirement. The training and support you’ll receive will ensure that you’re fully prepared to take on the franchisee role, even if you’re a complete novice.
4. Reflect on your personality type
What does matter though, is what you like or feel comfortable doing – and what you don’t. If customer service skills don’t come naturally to you, then buying a franchise in the retail sector probably isn't for you. If you like the company of other people around you while you work, then a home-based franchise is perhaps out of the question.
Self-reflection is crucial to ensure you make the right decision. If you aren’t fond of following the rules, buying a franchise isn’t a wise business move. Ultimately, despite having more freedom and flexibility than being an employee, you do still have to follow what is laid out by the franchisor.
5. Research the franchisor carefully
You’ll be able to tell a lot from a franchisors’ website before you even get in contact with them. If the information they provide is professional, clear and transparent, then it’s usually a good indication of how they run their franchise as a whole.
From online research, you’ll also be able to find out if the franchisor is a member of the British Franchise Association (BFA). The BFA was founded in 1977 and promotes standards of ethical franchising in the UK. If a franchisor can’t meet these standards, then they cannot join. It’s not merely a case of paying a membership fee.
So, if a franchisor has been granted BFA membership, you can be sure that they’ve developed a robust franchise model and have a proven track record of success. This stamp of approval should give you peace of mind that you're joining a fair and ethical franchise that has passed strict criteria set by the BFA.
6. Speak to current franchisees
As part of conducting your due diligence, you should talk to existing franchisees of the franchises you are contemplating. There is always the risk that the franchisor will not provide an accurate representation of what it is like to own the franchise. Therefore, speaking to franchisees should give you a more reliable idea of what to expect on a day-to-day basis. Here are some questions that you might want to ask…
• What are some of the biggest challenges you have faced and how did you overcome them?
• What do you think is key to being a success?
• How long did it take for you to start making a healthy profit?
• If you were in my position, what would you want to know? Would you do anything differently?
• Does the franchisor provide sufficient support and guidance?
This list isn’t extensive by any means, so before talking to an existing franchisee, make sure you are certain of what you want to find out.
7. Develop a financial plan
When you know which franchise is right for you, establish how much the franchise fee and set-up costs will be and create a plan to achieve this amount. If you’re still in paid employment, find out how much your contribution to the set-up fees will need to be, and save for this.
There are a variety of funding options, but most require a personal contribution to the fees. And don't forget about that need for working capital to cover business-related and personal expenses until your new franchise starts to fund itself.
8. Prepare for the transition
It can take months from your decision to own a franchise to the day you start trading. During this time, you need to perform due diligence on your chosen franchise, have multiple meetings with the franchisor, complete all the relevant paperwork, consult specialist franchise professionals and attend pre-launch training.
This is all very time consuming, but you may also need to continue working during this time to earn a wage. If this is the case, then consider reducing your hours with your current employer. This will enable you to dedicate the necessary hours to franchise-related tasks, while still being able to cover your expenses.
9. Talk to your family
Many entrepreneurs underestimate the importance of the support that their family and friends provide when starting a franchise. To become a successful franchise, it’s crucial that they understand what will be expected from you and be there when you need them.
Involve loved ones throughout your whole decision-making process so that they can appreciate the amount of blood, sweat and tears that may be shed while you're getting your new business up and running.
10. Get ready to be the boss
When you become a franchisee, you’ll be required to follow the rules of the franchise model and meet financial obligations. But remember, you’re still the boss. The day-to-day operation of your new franchise will be your responsibility.
Make sure you keep up with the latest industry trends, recruit well and take advantage of the support that your franchisor offers. Most of all, enjoy the flexibility and freedom that comes with being a franchisee.
Becky Martin, Point Franchise ©