|
 
Is a Home-based Franchise Right For You?
By Susan Morris
Home-based franchises seem to be the only opportunities attracting new entrepreneurs nowadays. That’s not surprising given the present economy and how the expense of buying a "traditional" franchise, acquiring a brick-and-mortar location and then remodeling to the franchise’s specs can dramatically increase the price tag. Real estate issues and cost considerations aside, home-based franchises have become attractive for another reason: lifestyle.
Many of the current wave of franchisees are refugees from corporate America. They have sweated out layoffs, worked longer hours for less pay, seen rising gas prices absorb more of their weekly paycheck and have watched their nest eggs shrivel with a stagnant real estate market and volatile stock market. A home-based franchise is a way to realize the dream of owning their own business and creating a lifestyle that meets their situation and needs.
A home-based franchise appeals to this new crop of owners for a reason that goes beyond being able to work from home. By buying into an existing business with an established brand and business plan, you do not have to reinvent the wheel to get your business up and running. And with a franchisor as a support system, a home-base franchise can offer the structure of the corporate culture that many of them left, but without the commute, the bureaucracy and more control of their own fate.
What types of things should you consider when purchasing a home-based franchise? Besides the legwork/research from a business erspective, you really do need to do a bit of soul searching from a lifestyle perspective. Some things you absolutely want to consider when pondering a home-based franchise opportunity include:
Is it a product or service that people want? - It goes without saying that you want to sell something that people want. Even if there is a current demand, will that still exist in a few years or longer? For example, the packaged goods industry reported sales of $68 billion in 2008 and estimates sales in the $82 billion neighborhood by 2013. So purchasing a home-based franchise where you sell packaged goods to retail outlets or a vending machine opportunity might be something to consider for now and for years to come.
Is it a product or service you believe in? - When you own a franchise, even if you have flexibility in how you run it, it will take up a significant portion of your time and, most certainly, your thoughts. You want that time to be spent selling something you believe in strongly and would purchase even if you were not selling that product or service. That’s a huge reason why franchise opportunities that are part of the "better for you" market-health foods, vitamins, etc.-are quite popular these days.
Does your franchise really fit into your lifestyle or vice versa - The primary reason people opt for a home-based franchise is lifestyle. That could be to spend more time at home with family, to give yourself flexibility to travel (with your laptop, of course), to avoid the hassle of commuting or many other reasons. Before investing in any franchise opportunity, it’s important to assess what’s important to you in your life. Put it in writing. Then jot down what you want a typical day running your franchise to be like. How many hours a day do you want to work? How often do you want to go on vacation? What if there’s an emergency in your life? Who can step in and help you run your business? Be honest. Thisassessment is extremely important before jumping into any business.
Presenting yourself as a business, even though you work at home Many home-based franchises are structured so that you go to the client or potential client rather than them visiting you at your home office. Some clients may want to visit you for whatever reason. If you’re not comfortable having potential clients visit your home office, you should probably arrange for other accommodations. Many office buildings will rent out space and allow you to use their conference room for meetings. While this is a detail you can work out after you start your business, it’s important to remember that even though you work at home, you are a business and want to present that way.
Training and support from your franchisor - It’s critical to know exactly how much training, marketing and promotional materials, legal assistance and other support your franchisor will provide. Ask specific questions of your franchisor, especially if it involves something you are not comfortable with. For example, our franchise opportunity requires refrigerated storage space and transportation. Since we know some of our franchisees might not have experience in securing either, we offer assistance in helping our franchisees lease refrigerated storage space and vehicles. Additionally, you want to be aware of your franchisor’s requirements for how you run your business, particularly with regard to marketing. Some franchisors will give you a lot of freedom to run your own show; for others, it’s my way or the highway. Know your franchisor’s expectations in advance.
Other franchise owners - Obviously, you will want to speak to other franchise owners prior to making a purchase. Develop a list of questions in advance and make sure you leave no question unasked. If it is at all possible, meet with the franchise owner in person. If not, you might want to try Skype or some other form of videoconferencing. While some franchise owners might freely share information and their thoughts, others might be more hesitant or worse paint a rosier (or thornier) picture than what actually exists. By meeting in person, you can get a better sense if you are getting an accurate portrayal of the opportunity.
Franchisee councils - For larger, brick-and-mortar franchise opportunities, franchisee councils are fairly commonplace. For home-based businesses, these councils may not be as prominent, depending on the size of the company. For many homebased franchise opportunities, if they do have franchisee councils, meetings may be limited to annual conferences or web conferencing. Whether or not a franchise has a franchisee council or councils, it does not necessarily have to be a deal breaker. It is something you want to give some thought to as it can be extremely helpful to have a resource where you can turn to other franchisees as a sounding board or just exchange ideas on what’s working and what’s not in your business.
Benchmarks for success - Most likely your franchisor will make clear their expectations, but you really should draft your own goals and benchmarks. Chances are if you are leaving a job to start your venture you will need to effectively replace your salary and be able to cover the overhead costs of running your business. That means you need to clearly define how much you need to make to pay your bills, etc and then, just as definitively, put down your goals per quarter, per year, etc.
Planning for growth and success - You want your home business to be successful, but are you prepared for that success? Will you have to hire people? Do you want those people to work in your home? Or will success mean you have to alter your idea of a homebased business and lease office space. The saying "businesses don’t plan to fail, but fail to plan" can also apply to businesses that grow too fast. Preparing yourself for growth and success is something you need to consider. It’s actually quite a fun exercise to dream what your franchise opportunity could be.
Trust your instincts - After you have done all your research, asked all your questions and consulted other franchise owners, what does your gut tell you? Do you have a good feeling about the product or service? Or is there some apprehension that you are ignoring because overall you like the opportunity (e.g. perhaps something the franchisor said didn’t sit well). Trust what your gut instinct tells you.
Home-based or not, making the decision to buy and then run a franchise is a huge commitment. By doing the research and then conducting a full assessment of what you want and expect to get out of the opportunity is critical in making a wise and profitable choice.
Susan Morris is a senior vice president with Natural Fruit Franchise Group, makers of Chunks O’ Fruti® 100% natural frozen fruit bars. For information, please visit www.frutifranchise.com.
|
