If you are considering buying a franchise, there are many things you are evaluating. After all, making an investment into your future is not something to take lightly.
Unfortunately, not every franchise presents the same opportunities for your personal growth, business development and alignment with your goals. As a result, potential franchise owners can often become convinced solely by the flashy messages, promise of high revenue, and “guarantee” it’ll be an easy, mailbox money endeavor.
At AvenueWest, we know first-hand that franchise ownership can present success. However, we do our due diligence on potential owners, and recommend they do the same on us.
Whether you are considering an AvenueWest franchise, or something else, here are our top five recommendations for critically important factors to consider and evaluate before signing a franchise agreement.
Is there a demand for the service or product?
There are plenty of great ideas and unique products in the market, but they go nowhere if consumers and customers don’t need them. Before purchasing a franchise, consider the relevance of the business. Is it sustainable, or is it a one-time trending fad? Is there a steady customer base, and does that base have the potential to grow? Do your homework by speaking to existing customers, other franchise owners and those affiliated with the industry.
The AvenueWest Way: With over twenty years in business, AvenueWest is proud to be a leader in corporate housing with a strong reputation for superior quality, five-star customer service, and a diverse portfolio of residential properties. Our unique approach has enabled growth amidst economic downturns and allowed us to expand our customer base to families and individuals who are relocating through our vast inventory of single-family homes.
What risks are associated with the business opportunity?
Whether you finance your franchise purchase or invest with cash, there will always be risks associated with any entrepreneurial business endeavor. However, beyond seeking a “return on investment” in your franchise purchase, it is important to understand additional risks and potential expenditures down the road. From human capital and training costs to property leasing and insurance expenses, there will be additional costs in your business operation. We recommend fully understanding what those are from the start and making a plan to avoid unexpected risk exposure.
The AvenueWest Way: A key difference in AvenueWest’s approach to corporate housing is that we partner with property investment owners to lease and manage their residential properties to corporate housing customers. Our model provides a valuable service to property owners that wish to rent in corporate housing, while keeping franchise owners’ risk profile lower by not having rent exposure when properties sit vacant. With on average above 90% occupancy rates of our managed properties, it’s a win-win for everyone.
Is my personality the right fit for it?
Many franchise businesses may present themselves as “mailbox money” operations. Essentially, make an investment upfront and the money just flows with minimal effort required. While we recognize there may be some rare opportunities like that available, the vast majority of franchise businesses require a particular type of skills and engagement from its ownership, or the ability to hire the right team to do the heavy lifting. It is important to understand the full picture of your investment and the role of the owner before signing on the dotted line.
Taking a personality assessment can help you quickly identify if you are an extrovert or introvert, and the skills that come naturally to you such as people management, sales development and attention to detail.
The AvenueWest Way: At AvenueWest, we seek our strategic, hands-on owners that want to put in the hard work to create a comfortable lifestyle for themselves and their families. We value teamwork, pride in ownership and a relentless commitment to quality and superior customer service.
What skills are required for the business?
Just as you would assess your personality match for a franchise ownership, it is important to assess the skills required to own and manage the business. While franchise owners typically seek to outsource some functions once the business is profitable such as bookkeeping and website management, there are typically some skills that should be performed “in house” with the owner.
The AvenueWest Way: At AvenueWest, each owner must be a registered real estate broker or be willing to partner with one while obtaining his or her license. Without a strong real estate background, it is difficult to provide our full-service offering to corporate housing customers. With over 1.3 million real estate agents in the US, AvenueWest continues to be an attractive option for agents looking to create a secondary, monthly recurring source of income.
Is there a territory I own?
Last, and certainly not least, it is important to understand your relationships internally in the franchise enterprise. Many franchise businesses operate with a team-mentality, encouraging growth and collaboration, and not competition, amidst neighboring franchise owners and businesses. This is usually enabled by providing each franchise owner exclusivity on a geographic territory, or creating clearly defined terms for lead management and referrals. When a franchise enterprise can collaborate and grow, each owner benefits from the brand recognition and network development. We recommend asking details about how the franchise defines territories, and the culture behind the franchise enterprise that can encourage or discourage collaboration amidst the owners.
The AvenueWest Way: At AvenueWest, we are proudly stronger together and value a team-mentality. Through our nationwide network of franchise owners, we can be that “one-stop-shop” for corporate housing customers to place employees across the United States while creating a strong brand reputation that never disappoints our valued customers and partners. Each owner manages his/her territory, while openly collaborating with other franchise owners by sharing referrals and operational best practices.
Whether you are just days in or years into your franchise search, it is always a good time to stop and ponder these important questions. At AvenueWest, we always make sure our potential franchise owners go through this exercise so it’s a rewarding experience for all.