Buying a franchise is a great option for anyone who wants to own a business without having to start completely from scratch. While franchises vary in size, investing in a small franchise business offers the following benefits:
- More affordable entry cost
- Simpler operations
- Less staff required
- Maintain a hands-on approach
- Better work-life balance
Purchasing a small franchise is an ideal starting place for individuals seeking a manageable business ownership opportunity.
5 Things to Look For In a Small Franchise Business
#1 – Assess the Franchise’s Brand Reputation & Market Demand
A franchise with solid branding is crucial to everyone’s success, both the franchisor and its franchisees. While a small franchise brand might not be as recognizable as larger franchise operations, it’s still important to choose a brand with strong market recognition and good reputation. A few questions to ask when researching a brand include:
- What is the franchise’s customer base in the target region?
- What is the demand for the franchise’s products/services?
- Are there any recent consumer trends that could impact the franchise’s future success?
Whether a franchise is small or large, choosing one with a strong brand is key to becoming a successful business owner.
#2 – Understand Initial & Ongoing Costs
It’s essential to understand the financial details of business ownership if you want to achieve long-term success. When considering whether you want to buy a small franchise business, make sure you do the following:
- Evaluate all upfront costs including franchise fees and setup costs
- Review ongoing fees like royalties, advertising contributions, and potential cost for supplies or training
- Weigh the financial commitment versus projected revenue
A franchise could have incredible systems and operations, but it won’t succeed if it isn’t financially sustainable.
#3 – Review the Franchise Agreement & Terms
To avoid unexpected complications in the future, make sure you carefully review the terms in the franchise agreement. This includes evaluating the contract length, renewal terms, and termination policies.
When you buy a small franchise business, you should understand all parties’ obligations so there isn’t anything that catches you by surprise. It’s worth hiring a franchise attorney to protect your interests and ensure the agreement’s terms are fair.
#4 – Support & Training Offered by the Franchisor
Most franchises will provide some level of training and support (e.g. marketing and operational support). It’s important to assess the type of support given to ensure it will help you succeed as a small franchise business owner. You should also confirm that the franchise will provide ongoing resources and assistance as the business grows.
#5 – Understand Local Market Regulations & Compliance
Complying with federal and provincial laws is pivotal to buying a small franchise business in Canada. Make sure you understand industry-specific regulations such as health and safety rules for food franchises. Taking this step seriously will help you avoid unnecessary hurdles down the road as you’re trying to run your business. This is another reason why it’s important to work with a franchise attorney when pursuing franchise ownership.
Take the First Step to Franchise Ownership Today
Make sure you do your due diligence when buying a franchise, no matter the size. Taking time to thoroughly research your options, pursue legal guidance, and understand all of your financial obligations will make the path to successful franchise ownership much smoother. FranNet can also help you get started on the right foot. An expert franchise consultant will match you with the perfect franchise opportunity, answering any questions you have. We’ll guide you through the process from start to finish. Schedule your free consultation today to get started!