It’s the end of National Black Business Month and we will soon celebrate the Small Business Administration’s National Small Business Week festivities later in September. As such, I want to end this series on small business with one question: Is franchising a business right for you? 

In case you’re not familiar with, or need a reminder on, franchising, let me break it down for you. A franchise owner, also called a franchisee, purchases a franchise (type of license/permit) allowing them access to the franchisor’s (established company) business resources, such as their name, business models, products, systems, and trademarks. A few popular franchisors that you may be familiar with are McDonalds, Seven-11, Kentucky Fried Chicken, or YoYogurt. 

The franchise owner will often pay the franchisor a variety of fees depending on the business and licenses. These fees can come in the form of start-up fees, annual fees, and possibly commissions or royalty payments on profits.

You may not be able to own as many franchises as Junior, but I bet the idea of owning a franchise has crossed your (or your friend’s) mind at some point. I want to leave you with a few things to consider: 

• Why are you considering franchising a business? The answer to this question will help you narrow in on your motivation and ultimately serve as a ‘north star’ that drives your actions and decisions for the business. For instance, if you are pursuing a franchise because you want to get rich, I want you to know that one major survey of franchise owners concludes that the average pre-tax salary of a franchise owner is $80,000. Now, the same survey states that 7% of franchise owners make over $250,000 in a year. You also might pursue a franchise opportunity because you want more independence or flexibility than your current circumstances allow. If this is the case, you should consider whether owning a franchise is the best path toward that end-goal. 

• Are you serious about the due diligence? Undergoing any endeavor takes work, and thus you must ensure that you do your homework on the potential franchise buying opportunity. Think about the franchise that best suits your needs and desires, and figure out what the specific requirements are for owning that franchise. If you don’t like what you see, I would encourage you to keep your options open and consider another franchise. Remember, the ‘why’ that you answered in the question above will dictate these other options too. There are best practices in conducting due diligence on franchising, and some of the practices that I would prioritize are: interviewing current franchise owners, reaching out to former franchisees, and examining the franchisor’s financial statements. 

• Do you understand the risks? Finally, I want you to understand what might go wrong, and what might prevent you from getting the returns you expect. Does the franchise opportunity reflect the potential to scale to multiple locations, or will you be saddled with one location. Many successful franchise owners will want to know the pitfalls of running the franchise so that they can try and minimize mistakes and unwarranted expenses. Also, I strongly encourage you to find out if other franchise owners have a goal of buying that same franchise again, or would they make another choice. The successful franchise owners often understand their downside in order to make more upside.  

If you’re interested in learning more about franchising, check out the International Franchise Forum for comprehensive resources and advice.

A Wealthy Girl Corner

You might be doubting yourself and your abilities today. Stop those thoughts. I am reminded by one of Robin Roberts’ quotes:

“It takes courage to believe the best is yet to come!”

our future is bright and you have the wealthy girl mindset to step into the brightness and soak it all up. 

If you need more encouragement, I talk about the power of claiming that mindset with Debroah Owens, the founder of the Wealthy U Community, for a Wednesday Wind-down session. I also talked about the importance of having an investor mindset and becoming the CEO of your wealth. Your past does not define your future. You can find our full talk here.