Considerations To Keep In Mind Before Investing In A Franchise
Devin Haman is the CEO and Co-Founder of Beverly Hills Rejuvenation Center, the nation’s leading medical spa franchise.
This past year has been difficult for many people around the world. But even with the challenges brought on by the pandemic, a surge is expected in franchising in 2021. The International Franchise Association estimated in February that more than 26,000 franchised locations could be added this year, according to CNBC. This expected gain of 3.5% would help offset declines the industry experienced in 2020.
I believe part of the reason for this projected growth may be attributed to the fact that many employees were forced into unemployment in 2020. This gave them a chance to look into options they might have never considered before, especially if they had been content with their previous job.
Furthermore, as the CEO and co-founder of a medical spa franchise, I’ve seen firsthand there are many options you can choose from when it comes to franchising, which makes it an attractive option to many. Franchising can also be extremely beneficial because your risk of opening a business may lessen since you’re leaning on an existing brand, and franchisees typically receive support throughout the opening process and beyond. Before jumping into franchising, however, it’s important to understand how to find the right type of business for you.
What type of franchise should you pursue?
There are two ways to tackle this question: You could either opt for something you love and enjoy, or you could opt for something strictly because it is known to have good financial gains and profitability for years to come.
From my perspective, the best way to look at this is to consider the outcome you want to see when investing in a franchise. The major benefit of investing in a well-established brand name is that no matter the industry, you will likely have patrons of some sort who are loyal to the brand. But ultimately, I recommend choosing an industry you are either passionate about or knowledgeable of. Financial gain will eventually find you if you are running your business correctly — no matter which franchise you choose.
As you research your options, keep in mind that if your goal is to be more hands-off, you will want to ensure the franchise you choose has a solid business plan and provides adequate support. Once it’s off the ground and running, you can step back as much as you want and hire appropriate management.
Another important factor to consider is that franchises do cost money to get started. While I’ve found the return on investment is typically worth it in comparison to the cost of starting a new business from the ground up, each industry comes with different costs. In general, for a sum of money, you are given a business. That business comes with an accredited name and support from the corporate company, but from then on, you might need to pay royalties to the corporate company, depending on your area/industry. Costs can pertain to each company very uniquely. I recommend you reach out to any companies you would be interested in franchising with and have an open discussion with them regarding startup costs and post-opening costs.
Franchises can offer great opportunities, but remember to do your research.
I find that franchises usually give amazing support to the people who invest in them — support that can help significantly decrease one’s chances of failure and financial risk. From my perspective, people breaking into franchising are not only given a blueprint and a support system but also a sense of ownership and stability, which is something incredibly sought-after today. If you are interested in getting to know more about franchising and how it can impact your life, my biggest recommendation is to do your research to ensure you are heading into an industry you want to be a part of.
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