Most entrepreneurs who have tried franchises will give you mixed reviews about their personal experiences. Some will tell you that it’s not as glamorous as advertised but there is the opportunity to make profits. Some will argue that it’s the easiest way to invest. Others will tell you that it’s a risky and complicated venture. So, why so many perceptions? The reason is that most of these people never asked the right questions before getting into a franchise business. To ensure that you are informed before taking up the investment opportunity, here are 6 important questions that you should ask.
1. What Do I Gain from the Investment?
People join franchises for different reasons. Some do it for fun while others to build equities. There are others who do it as their primary income source. Answering this question helps you to be realistic about your expectations.
2. How Much Should I Spend?
Even though some easy franchise opportunities promise quick and better returns with a low investment such as $10,000, it’s not always the case. At times, you have to spend more to earn more. Roughly, most franchises ask for $100,000-$200,000 as investment amount.
3. How Long Should I Wait to Enjoy the Profits?
Franchises do not always guarantee instant returns. Hence, you have to prepare mentally for the possibility of waiting for some months and even a few years. It’s wise to set some money aside as you wait for the business to pick up.
4. What Skills Does the Business Need?
In most cases, you need good customer-handling skills. You should be a good communicator. Some franchise businesses offer training to their members, so you should know about them. This will help you run the franchise business successfully.
5. What’s My Exit Strategy?
This is a very important question that most people ignore. Both the complex and easy franchise opportunities require an exit plan. Are you planning to pass the business to a family heir? Or, are you planning to sell it? Answering these questions will help know how much risks to take.
6. How committed can you be?
There are people who prefer to be fully committed to their businesses, but for people who start new franchises on top of a full-time working job, this is not an option. Too many busy schedules eliminate a lot of franchise opportunities.
Final Thoughts
If you manage to answer the above 6 questions, you’ll be prepared for the franchises challenge adequately. The truth is that there are opportunities to grow and make significant returns out of your investment but you have to do it wisely by asking the right questions before investing.
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