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Is now the right time to open a franchise? It’s a question I get asked a lot. And my answer is always the same: if you don’t do it, someone else will. That being said, there are several factors to consider in order to set your franchise up for success within the current context of inflation, high-interest rates on real estate and other economic pressures.
What’s your “success persona”?
It’s critical to determine what success looks like for your new business. Are you looking to diversify your investment portfolio or seeking full-time cash flow? Maybe you want to be a silent partner and hand the day-to-day responsibilities over to someone else. Sometimes it’s about creating generational wealth and finding a hands-on business that you can own and operate with your family.
Once you’ve identified your personal and professional goals for opening a franchise, you might consider partnering with other people — with complementary personas — whose goals dovetail with yours. We have several Academy owners who have teamed up with like-minded individuals to share the financial commitments and operational obligations of starting a new franchise. For example, three CPAs and their wives, who are teachers, jointly own and operate Kiddie Academy franchises in Aliana (Richmond) and Cypress, Texas. Their skill sets are compatible with each other and applicable to our business model.
Using your previous experience to your advantage
Leveraging your existing skill set will help set you up for success. If you’ve worked in customer service, retail or other public-facing positions, you may be a great fit for the people side of the franchise business. For example, nurses and teachers have a natural affinity for the high-touch aspects of child-care franchise ownership. Those with experience managing teams may be well suited for multi-unit ownership—managing structures within a larger organization is a transferable talent.
Leveraging your existing skill set will help set you up for success.
We have owners with diverse backgrounds as Kiddie Academy franchisees. Having a predisposition for working with children is invaluable in understanding our mission, vision and values. Furthermore, this type of firsthand experience gives our franchise owners built-in credibility for marketing their businesses.
But don’t let a lack of relevant expertise prevent you from pursuing your passion. With the right support, access to resources and an established brand identity, you can transfer your skills to a new career in franchising.
Timing really is everything
As I said earlier, if you don’t build it, someone else will—exactly where you intended to. That’s why it’s important to fully understand the development timeline for planning purposes. While lead times vary depending on your circumstances, you always have to factor in how long it takes to find a suitable location for your concept and to complete the entitlement process. Then comes construction and contending with weather, availability of materials and other variables. Opening a new business is usually a long-term investment and requires a long-term perspective rather than a day-trader mentality.
If a high-growth market is not quite ripe yet, you may want to lock in your territory and your potential site to be properly positioned ahead of your competitors. It’s a long way to the finish line, and a head start really helps.
Is your franchise concept having a moment?
It’s critical that aspiring franchisees have a sense of the growth potential for a particular concept. If there’s a brand you really like, how quickly do you have to act? With more and more systems moving to multi-unit ownership models, expansion has accelerated and ownership opportunities are scarce for start-up entrepreneurs. What that means is you could get locked out of a particular concept, because its growth trajectory is simply too steep. Markets can become oversaturated by a particular franchise brand, creating a high barrier to entry and diminishing returns for new franchisees.
Decide what success looks like for you and leverage your background and transferable skills.
Decide what success looks like for you and leverage your background and transferable skills. Then learn everything you can about the brands you’re interested in and do a workback plan from the grand opening date to signing the initial paperwork. In other words, think backwards from your ribbon cutting to make a timeline of milestone moments and key dates. Proper planning is mission critical to owning and operating a franchise. And don’t be afraid to ask for help along the way.