Once you have decided that buying a franchise is the way to go, the next step is choosing what kind of franchise you should invest your money in. There are thousands of franchise opportunities to choose from. Therefore, you can easily select the franchise to your own taste.
Retail franchises hold a considerable position in the franchise industry. It is a wide category where many of the industries fall under it. By starting a retail franchise, you can have a business of your own. There are lots of choices available. Wander around any major regional shopping Centre, suburban shopping complex or even down a local shopping strip and you’re guaranteed to come across a retail franchise business.
Like its counterpart ‘service franchising’, retail franchising offers its own set of pros and cons. There are advantages and disadvantages that make it unique. In the right circumstances, retail franchising can make a very good career choice and provide a healthy income for many people. But you’ll want to do your homework and make careful considerations. First, look at the crowded playing field with a diverse range of retail franchises on offer. In Australia, prospective franchisees have plenty of choice when shopping around to find the right retail business. Like most other business sectors, retailing is very much driven by consumer demand and the state of the economy and so franchisees must be prepared for downturns in the market. Location is also crucial as it is imperative that customers can easily access the business. The wrong location can be disastrous.
While the retail sector is very tough and competitive, it is also one of the strongest. Retail franchises account for 35 per cent of the 1200 franchise systems operating in Australia and continue to be the fastest growing sector in franchising. Some benefits of a retail business franchise can include an established supply chain, economies of scale and national advertising campaigns. For franchisees looking to enter the retail sector for the first time, a non-background in retailing is not a barrier as many franchisors provide extensive training and knowledge about their market sector. It can be very rewarding but potential franchisees must do their research in selecting the right retail franchise that most suits them. For many potential franchisees, a retail franchise offers the security of a tried and tested business system, a recognised brand, established marketing tools, and ongoing support and advice.
Pros and Cons of retail franchising
If retail franchising sounds attractive to you, begin by taking a personal inventory. Examine your skills, interests, and financial situation. Do you like to engage with people (both customers and employees) regularly? Are you averse to retail hours (night and weekends)? Be honest with yourself. Also, do you have access to the significant amount of capital that may be required to get started? Can you afford to take on this kind of debt and risk financially and emotionally? These are all important questions you’ll want to consider. If retail franchising still looks good to you, then proceed to examine and define the brands and concepts that you could see yourself being a part of.
Keys to success
If you are going to choose a retail franchise concept, one of the keys to a successful retail operation is, as they say in the real estate industry, location, location, location. A retail franchise is driven by solid, consistent traffic. Look for locations or territories near you that could support a retail franchise. You’ll want some competition, but not too much.
One of the biggest differences between a service franchise and a retail franchise is the employee factor. You’re going to need them – lots of them – in a retail franchise. This means you’ll need to hire, train, retain, and yes, fire employees. HR is a big part of operating a retail franchise concept – and becomes even more so if you expand to operate multiple locations. Finding and keeping quality employees can be a challenge, but when you do find them, they can make your operation really shine.
Of course, retail locations require building, remodeling, maintenance, and updating from time to time. There are also permits, insurance, and all kinds of regulations to stay on top of.
But if you like to manage actively, work with a variety of people, and can delegate responsibilities, then retail franchising may be perfect for you. And, when you build a great location with high traffic and satisfied customers, you’ve built a successful business. Statistically, buying a franchise is the safest ways to own a business, but only if you choose the right one. The following key steps will help you choose the best franchise and prepare you for retail business ownership.
- Evaluate your skills, interests, and financial situation.
Before you buy a retail franchise you should take stock of your skills and interests. What is it that appeals to you about owning a retail franchise? Are you willing and able to work long hours, including evenings, weekends and holidays? Understanding your financial situation may save you time and money by narrowing your options to what you can afford.
- Research opportunities. Once you have narrowed the choices down to a few that match your skills set, interests and budget, it is time to dig deeper. You will need to do due diligence and review the franchisor’s disclosure document, franchise agreement and financial statements and interview existing and former franchisees to find out whether they are satisfied with their earnings and the franchisor’s performance and ability to fulfill their obligations.
- Research your market. You may have heard about a great retail concept and want to open a store in your community. However, does your area suit your target customer and demographic. If there is little or no demand for your product in a market, the odds for success are slim to none.
- Select prime location. The specific location within your target area also is critical. If you are situated in an infrequently traveled area nowhere near complimentary businesses or at the back of a shopping strip, you limit your earning potential. While it seems logical that shopping strips are great places to attract customers, not all retail stores work in a strip setting and may work better in a shopping Centre.
- Secure financing and choose a franchise. Once you have made your decision, you will probably need financing. There are numerous options, including conventional bank loans, bank accredited loans and home equity loans.
- Attend training/hire staff. To run the business, you will need training and an operations manual. Your franchisor should provide some form of training. Depending on your franchise concept, it is likely you will need to hire some staff. Before your business opens you will want to advertise and promote the opening of your business.
Once you have decided exactly what franchise fits you best, your job has just begun. You will need to meet with the franchisor, ask lots of questions and do your homework. Do not let anyone rush you or pressure you. Always remember: you are in the driver’s seat and can walk away at any time. Get it wrong and you may be risking hundreds of thousands of dollars that takes you years to recover from, so slow your decision down until you have explored all the pros and cons and are totally comfortable that the business suits you. And if you are looking for the perfect business with no risk, stop looking it doesn’t exist!
Kevin Bugeja, Managing Director
Franchise 4 U
Mobile: 0412 511 630