If you’re thinking of quitting your 9-to-5 and becoming your own boss, you could do much worse than buying into an opportunity in a burger franchise or similar food establishment.
The 2015 global fast food market was estimated to be $780 billion, with around $200 billion of that coming from the U.S. alone. Tack on an estimated 2.5% growth year on year, and it’s clear that a career as a franchise owner could be one’s ticket to a very comfortable life indeed.
Hold your horses though. Before you file your resignation, there are a few things you should know to make sure your business, and hard-earned capital, don’t go up in smoke.
Begin with yourself
The best business advice is often the simplest, and the same is true for selecting a franchise. What do you like to do? What are you really passionate about? Franchise owners who are naturally knowledgable or interested in what they’ll be buying into have a better shot at succeeding than those who just buy into opportunities to make a quick buck.
Take note that you should think about this question not just from an overall interest perspective, but from a task perspective as well. You could be into a specialized hobby, like board games, and think to buy into a board game cafe franchise. If you have a lot of knowledge about the hobby, that could be your competitive advantage. But don’t expect to be able to just sit in your shop and play games all day while customers come pouring in. In order to succeed, you’ll have to be familiar with managing stocking levels, ordering on time, negotiating with suppliers and logistics providers, and many other facets of the business that don’t necessarily have to do with your hobby.
You can also think of this in terms of your skills, and what you do best. Are you very detail-oriented? Did your previous job require you to interact with people on a daily basis? If you answered yes to both those questions, you could have the disposition to be a good cafe owner.
In addition to this, you should be able to identify any skill gaps you may have that the business will require. If you don’t have any exposure to hard skills, like accounting, or soft skills like people development and training, seek to plug these skill gaps with the many resources available to you.
Be smart about your capital
As a quick and easy way to acquire capital, many franchisees use corporate credit cards, instead of seeking out financing from lending institutions like banks. This could be a potentially costly decision, as interest rates on credit card debt are typically quite high; current estimates are at 15.5% and likely to rise in the coming years.
Also, carrying a lot of debt could damage your financial reputation in other ways, lowering your credit score and making further financing even more difficult to acquire. Bank financing, by contrast, can be a challenge at the start, but the stability and predictability of the loan will be beneficial in the long run; current SBA loans have interest rates of as low as 6.75%.
Stick to the system
One of the biggest attractions of buying into a franchise is acquiring access to an already successful system built by the franchisor. Consequently, it would benefit you to learn as much as you can about that system, while undergoing training. Ask intelligent questions, and don’t just go along to get it over with.
Once you’re operational, many franchisors will allow you to consult with them if you think that certain tweaks may be necessary in your case. Every business operates under unique conditions; the best franchisors know this, and should work with you to put you in a position to succeed.