We recently stated on our blog that 1 in 7 businesses in the U.S. operate as a franchise. It makes sense, as anyone with a healthy amount of working capital can purchase an interest in a turnkey operation and simultaneously become their own boss. Also recently, Forbes published an article titled, “Laid off, Why Now Could be the Best Time to Franchise.” It offered a fresh take on what is surely a devastating time in anyone’s life, and suggested an opportunity to spurn working for someone else, and go into the business of yourself.
While I would caution anyone who recently lost their job against haphazardly disregarding the years spent advancing in their given field, and honing the specific skill sets acquired, the article does present the reader with some compelling points for evaluation. What was the level of satisfaction with the prior career? What is the reader’s age and/or opportunities for continued advancement? Will employment be easy to obtain, or was the layoff a product of a larger industry shift?
While the article focused on the finer points in franchise ownership, before committing to a newfound career in franchise operations, it is important to evaluate all factors to ensure that this will be a good fit. The would-be franchisor must first assess things critically, such as their financial position, business acumen and skillset, business and personal goals, and the type of franchise that would do well in the local marketplace.
The first, and arguably most defining factor involved is the franchisee’s access to capital. All franchises carry an initial franchise fee. This is how the franchisor makes money, and is typically in addition to royalties on continued financial success. Without access to this capital, which can typically run up to $1,000,000 for the most established franchise models, the would be franchisee will not be able to make it past the application phase
The second factor involves the skillset and goals of the individual purchasing the franchise. Perhaps you are an accountant, and possess the business knowledge to keep the entity profitable, but you hate the smell of fast food. Similarly, if you are allergic to animals then a pet sitting franchise may not be in your best interest. Luckily, there are resources designed to match potential owners with available franchises that provide the best fit.
The final factor, and arguably the most important of them all, is the preparation and execution of purchasing a franchise. The purchase of a franchise is a detail intensive process with many agreements and legally binding documents. It requires a complete understanding of the Franchise Disclosure Document (FDD) and the Franchise Agreement with the entity you will be franchising with. While Franchises are regulated under Federal law, there are differences from state to state, with Georgia being no different.
If you are considering a career change into franchise operations, and would like help understanding the critical elements of the process, please reach out to us. Thrift McLemore’s attorneys will assist you in every phase of the agreement, and provide critical reviews along the way. Contact Thrift McLemore by email at firstname.lastname@example.org or by phone at 678-784-4150 to discuss how we can help you today!