Investing in Ownership

Investing is a hazardous business. It comes with a lot of risks, but offers the possibility of great rewards. Good investments are not all about luck. They are based on knowledge, research and good business sense. Nowhere are these attributes more important than in the realm of franchise ownership. Owning a business is more than just a financial investment, it is an investment of time and energy.

Franchise ownership requires a great deal more commitment than other, more passive forms of investing such as real estate and the stock market. Franchise ownership requires you to not only put your money on the line, but also your time, your energy and very possibly even your livelihood. However, business ownership also offers the chance for a significantly greater return on this investment than any passive investment ever could. This Return on Investment (or ROI), is your bottom line in deciding whether or not a franchise is right for you. You should have a clear idea of what you expect to get back from your investment of time and money, and should do the research to find out if the franchise you are looking at is capable of meeting those expectations.

Setting Expectations

It is important to set some realistic goals and expectations for what you want to get from your business prior to even starting up the search for an appropriate franchisor. Realistic, however, does not mean that you should settle for less than want. Looking to see a 15-30% return on your investment over the first few years of operation is not going beyond the realm of possibility.

It is important to keep in mind that what you can expect from your business relies on more than just the company your sign your contract with. It is true that there are certain reasonable expectations you can establish for any given franchise. However, whether or not your business meets its full potential depends largely on your own skill in running the business.

The 3 Rs

From the very minute you decide to explore the possibility of franchise ownership it is important to learn and adhere to “the 3 Rs”. These are, quite simply: Research, Research and Research Some More. If you end up with a lemon, chances are you have yourself to blame for not informing yourself to the best of your ability in the initial exploratory stages.

Where to Find Information

There is a wealth of information out there, but it is up to you to search it out. There are numerous websites dedicated to collecting data on franchisors and most financial publications collect and distribute data as well. Once you have a good idea what you are looking for, ask your potential franchisors for their Franchise Disclosure Documents. These documents will help give you an overall view of each franchises strengths, weaknesses and earning potentials.

Statistics and figures can only tell you so much, though. If you really want a good view of what you can expect from a franchise, talk to those who already own them. There is no substitute for practical experience in the field.