Buying a franchise can be the best move for an entrepreneur. Franchises take a lot of risks away from starting your own business because they come with a proven way to launch and run the company you’ve started. However, there are some things you should do before buying a hospitality franchise. This blog will help prepare you for this venture.
Do These Things Before Buying a Hospitality Franchise
Failing to plan means planning to fail, even with a proven system in a franchise model. Before taking the plunge to launch your own hospitality business, do these eight things:
- Study the market. This should be part of the due diligence you conduct before purchasing a franchise. How will you set your business apart from the competition? This is something that the franchise’s parent company can help you determine.
- Determine your strengths. How can you build your new business by capitalizing on your strengths but hiring talent that can supplement where you’re weakest? Are you good with people? If not, you definitely need a staffing agency to help you recruit or an HR manager to manage your employees? Are you bad with technology? How can the franchise parent company help? Even determining your strengths should help you pick a franchise in the hospitality field that is the best fit for your expertise.
- Determine your budget beyond the franchise fee and the cost of supplies and equipment. Are you ready to survive on break-even for a while as the business starts to grow? Even if you have a well-known brand, it always takes time to get net revenues up to the point where profits are solid. A good rule of thumb is to have one year of your salary put away before you launch the franchise.
- Avoid franchise consultants and work directly with the parent company. Franchise consultants seek to sign you into an arrangement as quickly as possible so they can make their commission.
- Recognize that, where there is less risk with a franchise, any new business is risky. Beware of statistics that suggest a franchise is a done deal; any new business brings risk so always plan for the worst and work hard for the best.
- Do your research. In addition to looking at your market and researching the company, look around the internet at tip sites for entrepreneurs that can teach you what you need to know. Anything that can keep you from making basic mistakes will help ensure your success.
- Talk to other franchisers both within the field you’re in as well as in related fields. Ask them about their high points and low points as well as what they would have done differently had they had the give of foresight. How long did it take them to earn a profit? How much budget did they really need? What is their biggest challenge still today?
- Make sure you read the entire Financial Disclosure Document (FDD) from your hospitality parent company. It’s a good idea to find a lawyer with experience with these documents; their fees could help you avoid a costly mistake.
Launching a hospitality franchise requires people. Fortunately, you have a friend in Gecko Hospitality, who can take the recruiting and hiring process off your hands. Talk with our team about how we can help you prepare for a more successful new business venture.