When looking to purchase a franchise, it's important to remember that the franchisor ultimately has say over your franchise purchase. They can choose not to award a franchise location to you for a number of different reasons. And each franchisor may have different criteria. That's why it's so important to be aware of the franchise's requirements.
You might also assume that you would never qualify for a franchise opportunity. However, you might be surprised. Here are some of the top dealbreakers when it comes to franchisors awarding a franchise to a new owner.
You Might Not Be Awarded A Franchise If…
You Have Bad Credit
To open a franchise, you have to pay an initial investment to help cover start-up costs, training, and other expenses. (Remember that these fees are outlined in the franchise disclosure document, FDD.) For many, this investment requires financing, especially if the franchisor has a substantial fee. However, financing can be difficult with current bad credit or credit problems over the last 5 years.
You may still be able to qualify for financing options if you have more recently made payments on time. If you've shown some credit improvement recently, even better. This may be enough for your franchisor or financing institutions to look past a less-than-stellar credit report.
You Have Filed for Bankruptcy
Filing for bankruptcy is a step beyond bad credit and can be difficult for a franchisor to overcome. A franchisor has to make money at the end of the day too. A recent bankruptcy is an indicator of irresponsibility and financial mismanagement.
However, there is still a chance that you could buy a franchise. If your bankruptcy was filed a long time ago, you may still be able to show that you are financially responsible.
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You Have No Available Cash
Most people will not have the liquid capital to pay their initial franchise fee in cash. That's why there is a range of financing options for prospective franchisees. But to qualify, you must be able to demonstrate your financial fitness.
If you have no savings and no cash on hand, it will be difficult to acquire financing to buy a franchise. It's important to franchisors that you have enough liquid capital available to support your business as it gets off the ground.
You Will Not Be Involved in the Business
Some franchise business models rely on the business owner being involved in day-to-day operations. However, some entrepreneurs look at a franchise business as a long-term investment and not a career. There are certainly franchise models for both situations.
However, make sure you discuss expectations with your franchisor early in the process. It can be discouraging to learn that you aren't a good fit because you don't want to be as involved. Some franchisors may still work with absentee owners as long as they have a strong, reliable team in place.
You Shouldn't Be Concerned If...
You Don't Have Experience Running a Business
Many first-time franchise owners have never owned a business before. But don't let that stop you from opening the business of your dreams! Franchise systems often work with individuals with little to no business experience. That's why they have established a clear business plan, training programs, and continual support.
Franchisors often look for personal attributes in potential franchisees instead of business ownership experience. They look for dedication, passion, and hard work. A franchisor can teach you everything you will need to know.
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You Don't Have Industry Experience
As you make the leap to franchise owner, you might also be making a complete career change by joining a different industry. But remember that franchisors are looking for personal attributes over your business experience.
If you do have industry experience, it will give you a leg up since you will already understand the products and services more intimately. But again, your franchisor can train you and help you navigate the industry if you don't have that experience.
Your Ideal Location Isn't Available
If you live in an area where your franchisor already has a presence, don't let that stop you! And if they don't have a presence at all, don't let that stop you either. During conversations with the franchisor, you will discuss the specific territory that you want to purchase.
If it is taken already, they can propose a different yet similar market. Or, there might be enough people and growth in the area to support multiple franchise units. And if the franchisor hasn't opened the area yet, you could be the trailblazer.
You certainly don't need to discount a franchise system because they do or don't have a presence near you. Reach out and discuss your options anyway before making a decision. You might be surprised at some of the options available to you.
Are You Ready to Buy a Franchise?
Every franchise system is different, so what they look for in their franchisees will vary. The most important thing to remember is to be upfront and honest with your franchise during the purchase process. Above all, dishonesty will prevent you from being awarded a franchise.
At Caring Senior Service, we look for candidates who are passionate about serving others. That passion often translates into dedication to the business and a high standard of quality home care. We have franchise owners from all professional backgrounds, and our training program helps them each gain the foundational knowledge they need to be successful. To learn more about a home care franchise, reach out to our team today!