Considering a Franchise? Start with These Questions
Every two hours, a new franchise opens in Canada. The popularity of franchising is largely due to its successful track record. Of all the franchises opened in Canada within the last 5 years, 86 per cent are under the same ownership and 97 per cent are still in business.
“Statistics show those who purchase a franchise are more likely to succeed than those going into business independently,” says Rhett Thurston, director of franchise development at The UPS Store Canada
After all, most individuals can only finance one attempt to build their own business per lifetime. Compound that with statistics suggesting 55 per cent of small businesses fail within the first four years and it’s clear the risks can be high. Franchising offers the small business investor an opportunity to benefit from a successful model and a proven business plan, while still getting into a business of their own.
“Franchising offers the opportunity for the small business owner to survive and prosper in competitive markets,” says Thurston. “When you combine an entrepreneurial investor, a strong and trusted brand name, a proven business model and the advantages of scale traditionally enjoyed by large chains, you really have the right mix for success.”
Starting a franchise may be one of the most important and rewarding experiences of your lifetime, but how do you begin? We recommend starting the process by asking yourself these important questions:
What type of business interests you?
Should you decide franchising is right for you, one of the first decisions you must make is to select a business concept. It’s important to find the right fit by choosing a business that will be enjoyable and also offers a high chance of success. Consider focusing on a business concept that is compatible with your interests, financial capabilities and lifestyle. If you don’t like working with customers, for example, don’t go into a service or retail business.
How important is quality of life?
Certain types of franchises will be more demanding of your time than others. Are you prepared to operate outside traditional daytime business hours, given that many businesses require a facility to be open late into the evening and/or on weekends? You should consider the impact this type of business will have on your personal life.
Do you have the necessary education and professional experience?
Some types of franchises – such as professional service businesses – require specialized training or education that cannot be accomplished in a few weeks. These are excellent choices for professionals with experience, but should be avoided by potential franchisees who do not already possess the technical knowledge required to immediately operate the business successfully.
Have you considered the HR requirements?
A labour-intensive business brings with it many complexities relating to human resources (HR), such as finding and retaining dependable employees and complying with governmental regulations regarding taxes, benefits, etc. Many of these issues can be avoided or mitigated by instead selecting a business than can be operated by small team – possibly including family members – and assisted by some part-time help.
What are the inventory requirements?
Businesses that require large inventory not only need more operating capital but also entail more risk due to the possibility of inventory obsolescence or improper selection. Also, carrying a large or expensive inventory opens up risk for shrinkage or theft from customers and staff. By comparison, service businesses are popular today because they require little or no inventory, which can be a definite advantage for franchisees.
Have you evaluated the brand?
Another key benefit to being in a franchise system is the brand recognition. Buying into a system with a proven and known brand rather than blazing that trail independently offers a clear business advantage. Besides industry credibility, you want to look for a franchise that offers high success and growth rates, has been in the industry many years, offers good retail locations, and provides ongoing training and support. Some of the best sources for information when researching franchises include the Canadian Franchise Association, the Canadian Business Franchise Magazine, and the International Franchise Association.
“Owning a franchise can be a most rewarding experience,” says Thurston. “Like any business, however, franchising is not without risk. Clearly identifying the type of business you are best-suited for requires lots of honesty and self-awareness about what you, as a businessperson, would bring to the table to help mitigate risk.”
Interested in franchising opportunities with The UPS Store Canada? Originating in 1980 and operating in Canada since 1988, The UPS Store network has more than 30 years of franchising experience. The opportunity is a mix of the trusted and recognizable UPS brand, a proven business model, extensive training and support to help franchisees run and grow their own small businesses. Click here for more information or call toll-free 1-800-661-6232.