It’s a common scenario: Someone walks into a chain restaurant, loves the food and ambiance and suddenly thinks, “I should own one of these.”
It’s tempting to pick a franchise based on personal experiences or love of the product. But the fact that you’re smitten with the business or what it sells doesn’t mean it fits your lifestyle, financial situation or long-term goals.
Franchise buyers need to spend ample time exploring their options and doing some thoughtful self-exploration before signing on the dotted line. The last thing you want is to buy a fast-food restaurant only to realize you don’t like 80-hour workweeks, chatting up customers or managing 20 people.
Many people buy franchises “thinking about how much money they can make without thinking about lifestyle issues,” says Mark Siebert, president of iFranchise Group, a Homewood, Ill., consultant to franchisers.
Of course, a franchise’s financial health is an important factor and franchisees must spend ample time investigating a system. But along with that due diligence, they also need to think about their own skills, lifestyle preferences and long-term goals.
This means answering questions like:
– What are my biggest strengths and weaknesses both professionally and personally?
– How much money can I afford to invest in a franchise without risking all my retirement funds?
– How much flexibility do I want in the hours I work? What’s my risk tolerance?
– What tasks will I be happy spending at least 30 hours a week doing? What are my long-term goals?
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