IF YOU WANT TO START YOUR OWN BUSINESS, a franchise can be a great way to increase your chances of success. As a franchisee in a major network, you can expect to benefit from professional marketing, national advertising, specialized training, and centralized purchasing. As well, you are statistically more likely to succeed with a well-established franchise than with a non-franchised independent business.
To get started, it’s important to have a holistic view of the franchise experience – including what you need to know at the beginning all the way to what is needed to sell.
Where to start
At the beginning, you will need to have a strong handle on your credit score history. Almost anyone starting a business will need to borrow in some way, so understanding this element of starting a franchise is a vital step. Ensure there are no discrepancies; if there are any issues, work as best as you can to resolve them.
You will also need to make sure your personal finances are in order; consider that you may not be able to rely on the business for income in the first few years of operation. Being prepared is essential.
How to succeed
When choosing a franchise, prospective franchisees often consider growth potential. Fundamental to this choice is an understanding that a franchise will always, at least in part, be dependent on the franchise brand. Look for a franchise that’s a good fit for you. Do your research! See what the media is writing about the franchise, speak with customers, and visit existing locations. Make sure you find a business model that you’re eager to commit to.
Longevity represents another vital trait to consider for a franchise. Some franchises pop up based on the latest consumer trends; they may well have excellent business models, but they won’t succeed without a sustained consumer appetite. Do your market research to ensure you are becoming a franchisee in a business with a long-term future.
You also need to consider the implications of hiring staff; this requires an understanding of human resources and payroll practices. When you set up your franchise business, you can make use of the payroll services that many banks provide to accommodate small enterprises and start-ups. As your company grows, you can transition to a payroll company – doing so provides the benefit of freeing up time for you and your staff to concentrate on actual business operations.
You also need to consider ways of keeping your staff happy. Talent retention can be a challenge, especially for a new and growing business. Do what you can to keep your team engaged; this leads to staff who are more loyal and invested in the company, which helps keep turnover to a minimum.
Closing the door on your franchise
Finally, you need to consider the end of your ownership. While it’s understandable that selling your franchise is the last thing on your mind when you’re setting it up, seeing the whole journey of ownership – including its end – must be an integral part of your business plan.
As part of your search for a franchise network, you should ask about succession – get an understanding of what is permissible and how the process works. There may be restrictions on a sale; a franchisor may insist you can sell only to them at a pre-determined formula, while another may allow you to sell to the open market with its approval and final say. Succession might be another option; if your franchise is meant to be a family business, you need to be aware of how your business decisions affect the value of your asset over a longer time horizon. Speaking to a wealth manager or estate planner will help you get your affairs in order.
Canada’s franchise industry is demonstrating an excellent level of growth. We have seen increased interest as more and more Canadians turn to franchising as their career and way of life. Done right, you can make a success of an exciting opportunity for business ownership.
Director North American Industry Sectors, Franchise Finance
BMO Bank of Montreal