Five Things to Think About Before You Buy Another Franchise
When you made your very first franchise investment, you were probably filled with a mixture of excitement and nerves. And this feeling doesn’t change when you invest in your second, third or even your tenth franchise. In fact, once you’ve successfully run one of the most profitable franchises, the fear of not being able to replicate what you have achieved over and over again can decide to become a multi-unit franchisee a tough one to make.
For ambitious franchisees who want to expand their business empire, the best franchises to invest in are the ones that encourage the ownership of multiple franchises. And if you do it right, it can result in a fulfilling and lucrative career. But get it wrong, and your decision to buy another franchise can have devastating consequences on your business, your finances and your emotions.
Here are five questions that you should ask yourself before you make your next franchise investment.
1. Is now the right time to expand?
When it comes to running the most profitable franchises, timing is everything. You need to make sure that growing from a single franchise to multiple locations is right for you right now, from both a professional and personal perspective.
Inevitably, buying another franchise will put additional stress and strain on your time and your emotions. You need to consider how expanding your portfolio will affect those around you, rather than just reviewing it as a business transaction. Even the best franchises to invest in can be doomed to failure if you don't have sufficient support from family and friends because you've chosen the wrong time to grow your business.
Similarly, if the timing is wrong from a professional perspective, your franchise growth will be hampered by issues from day one. You need to start by reviewing how sound your existing franchise is. Your first franchise will act as the foundation for any subsequent units, so you need to ensure that it’s robust.
If you grow before your current franchise is operating successfully, purchasing more units will only add to your problems. The time you can spend on each franchise will be reduced, and so you may end up with two franchises with average performance. If you are unsure that your foundation is strong, then delay buying your next unit and focus on building one very successful franchise.
2. What happens when ‘you’ is taken out of the equation?
Have you ever stopped to think that perhaps the success of your current franchise is down to you? You and your personality will play an enormous part in what your franchise has achieved. If this is the case, then when it comes to attempting to replicate your franchise it may not work as well without it being the sole focus of your attention.
Before you make another franchise investment, it would be wise to invest your time rather than your money into passing on your know-how to your employees. They may not be able to replace you, but if you share some of the secrets of your success with your team, the sooner you'll be able to move on to the next franchise confidently.
3. Have you got the right people in place?
As a franchisee, your employees are your greatest asset. When you’re running a single franchise, your success often relies on the strength of your team. You need to have a relationship with them based on trust so that you can be confident that they’ll make the right decisions for your business.
Having a strong team in place is even more critical when you become a multi-unit franchisee. But the type of manager you are also has an impact on your ability to successfully run a second franchise. If you find it tough to delegate tasks or don’t want to hand over control of your franchise to your employees, then you may want to think twice about opening another unit.
As you expand your franchise portfolio, you'll need to be able to have faith in your employees and their ability to carry out the roles and tasks that you have prepared them for. You can’t be in two places at once. Therefore, you can only become one of the most profitable franchises with the assistance of your team.
So, before you agree to make another franchise investment, you need to be confident that you're ready to delegate and your team are prepared to step up and take more responsibility. If neither of these elements is in place, then it's a sure sign that you're not ready to become a multi-unit franchisee yet.
4. Can you afford it?
Business growth is great, but without adequate funding sometimes you have to walk away from an opportunity. You might not have the required funds available, or you may only be able to secure the capital through overreliance on debt.
Stretching yourself financially can put a real strain on both your professional and personal life. Deciding to expand when you're not in a financially robust position will only lead to problems further down the line. The best franchises to invest in have understanding franchisors at the helm who wouldn’t want you to put yourself in a vulnerable position financially.
Before you make any investments, you should always consult an accountant or financial advisor that specialises in franchising to discuss your options.
5. Are you just coming up with excuses not to expand?
You’ve spoken to other multi-unit franchisees, you’ve completed some research on the potential new location, and you’re happy that you can comfortably afford to purchase another franchise unit. So, what’s stopping you?
Of course, due diligence on any additional franchise opportunities is as important as it was when you bought your first franchise, but as the saying goes, procrastination is the thief of time. You may miss the perfect opportunity if you overthink your growth plans. If you’ve got a strong team in place, you’ve done your homework, and you’re ready for a new challenge, now sounds like the right time to become a multi-unit franchisee.
The Editorial Team, Point Franchise ©
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