Franchising opportunities are all around us. Nearly every large corporate entity in your area can provide a great means of expanding your business footprint by opening a new location with the mark of an established and trusted brand that makes you money. Exploring franchise opportunities is a great way to improve your overall cash flow, but there are some things you have to do before opening that new corner shop or fast food joint.
Financial Due Diligence
Before opening a new location, you must explore the financials of the proposition. This means taking stock of the franchising fee, business model, and client need in your area. This is a standard process that must be done with any business. However, buying into a franchise includes some unique expenses that are not present in a new corporate start-up.
Take for example Mcdonalds. The fast-food giant requires constant access to a supply chain of delivery trucks and food products. It needs cold storage and cooking equipment. Mcdonalds also needs to advertise itself in order to drive traffic into its stores. Your pop up hamburger shop needs all those elements too, but what’s missing is the established brand power that sells more than 75 burgers a second, the advertising machinery that sells the patty for you, and the constant movement of a supply line that will always bring you the fresh ingredients required to produce those crisp golden fries.
With a franchise, you don’t have to worry about these major considerations that plague individual small businesses. But you do have to pay a high price for the name and the convenience that comes along with it. Before buying into the name, make sure that your customer base is strong enough to support the business, and that your cash flow is sufficient to provide you with a net positive after taking salaries, fees, startup costs, and other budgetary restrictions into account.
Shop Around for Insurance
Getting comprehensive business insurance is a must for any new franchise location. Insurance coverage can protect you and your investment against property damage, workers’ compensation claims, and even lawsuits. In an office, small accidents can be blown way out of proportion, so general liability coverage is an essential consideration for any new up and coming business.
Medical insurance is also a great idea. Extending access to medical coverage for your full-time employees is a complicated tangle of decisions, but it will make your core team far more interested in the overall goal that you are all trying to achieve.
Finally, doing your homework on the location where you intend to set up a shop should be a core requirement before finalizing any arrangement. Conducting market research in order to understand the consumer spending trends in your local area, as well as potential competition is a must.
A business that doesn’t plan ahead is doomed to fail, so understanding the consumer landscape that you want to compete in should be one of the first things your new business venture does to ensure its long term viability.
Once you have selected a great location, doing a little of your own pre-opening advertising may go a long way to drawing in your first customers.
A franchise benefits from name recognition, but only if people know where to look for your store. If you’ve just opened a UPS store, it might be helpful to engage in some local advertising to get the word out that a handy neighborhood solution for mailing needs has emerged in the area. If people don’t know you exist, they can’t patronize your services.
Do your homework before opening a new franchise location, and make sure you go in with a plan that sets you up for success.