Doing research on owning a business? It’s true, owning a business is not without risks. But did you know that franchise companies may be able to give you insights on yourself as an owner? Franchise companies are picky about who gets awarded a new franchise. Try going through their process to learn about how you stack up as a business prospect!
So, why does a franchise company's opinion of me matter? Easy. They get thousands of new business applicants monthly. They use a proven system that works (so they know what to look for in candidates). And most importantly, they make efforts to only accept those that meet specific qualifications - because a failed franchise can cost the company thousands of dollars!
Below are some of the steps a top franchise company will ask you to take in order to see if your current situation suggests you can be successful business owner.
If you make it through all of these steps, there’s a good chance that you are a strong candidate to own a business.Get Informed
The first step a franchise will take is to make sure that you have realistic information and expectations. This will help you make a good decision as to whether an opportunity is the right one for you or not. For franchising, information usually starts out broad to give a taste of what it’s like to be in the business, and then narrows down to specifics. Franchise companies may even let you shadow a local owner - giving you first hand experience of what a day in their life is like.
Why is this step important to ensuring success? Top franchise companies know that when given the right information, you will be able to make the correct decision to either pursue the opportunity or look for a different one. In their eyes, no matter what you choose everyone saves valuable time!
Soft credit check
Running credit is a fast and easy way to determine payment history and prevents candidates who aren’t currently equipped to run a business from starting one.
Why is payment history important? Business owners need the ability to secure loans; loans help get new companies off the ground. If a candidate has a history of late or missed payments, they are more likely to default on a business loan – which leads to an increased risk of the business failing. In addition, since most franchisees will be handling more cash than they are accustomed to – if they are able to practice solid money management principles in their current situation, they are more likely to be able to continue those solid principles as franchise owner.
To stop people from starting a new franchise that is likely to fail as a result of defaulting on loans, companies like Matco Tools require a credit score that includes an overall positive payment history.
Did you know: almost all franchising companies will ask to run your SSN/SIN for a soft credit check.
For franchise businesses like Matco Tools, the soft credit check DOESN’T affect your credit score and is noncommittal. *There are some franchise companies that will NOT require a credit check or will accept a low score. If this is the case, you may want to be cautious in your consideration of that company.Budget analysis
Building a budget is a critical step in starting a business. This step is also where many new businesses stumble. You will want to calculate important numbers like expenses, projected revenue, and gross and net profits. Personal expenses must also be taken into consideration, since the franchise will replace your personal income (and must cover your cost of living). As part of the approval process, a franchise will look very closely at the financials of each candidate to make sure everything checks out.Interview
Have you ever heard the saying that it’s easier to teach a novice than an expert? It’s true, old habits are hard to overcome, and for franchise companies it is important to find new owners who choose to have a beginner’s mindset.
This is because franchise models are built using systems that have been tested and proven to work over time. Sure, for those who have previous experience owning a business there is room for customization, but for a new franchisee, having the ability to follow the business system is important. That means being open to established processes and then following through. Qualities like persistence and organization are what a franchise company will look for to determine if you're capable of following their system, and translate to all business ventures.
During an interview the franchise company will be able to introduce some of the business system to you which can give both parties a sense of whether there is a good fit. In addition to those listed above, there are several additional steps to owning a franchise that will help you become successful. Among these are training (classroom and field) as well as ongoing support from the company and other franchise owners.
|Considering owning a business? See if YOU'RE a strong candidate today!|