Hey guys, in this article, we will discuss the most important things to note before franchising a tech company. So keep reading.
Today, entrepreneurial opportunities are much more common than they were in the past. What this means is that leaving one’s day job and becoming one’s own boss is no longer a dream; it’s a possibility.
However, not everyone has a million-dollar idea in their pocket just waiting to be used. Starting your own business does not necessarily require one though: this is where franchising comes into the picture.
The idea of franchising is nothing new. For decades—almost a century—those who knew how to turn opportunities into something bigger have been taking advantage of this model that benefits both the owner of the brand (the franchisor) and those in charge of operating the various units of the business (the franchisees.) While food franchises may be the most widespread in this industry, tech companies are not lagging far behind.
Considering technology’s prevalence in every area of business and life in this day and age, investing in a tech franchise may not be a bad idea, whether you’re a professional in the field or you just possess a special interest in all things technology.
Here are a few important things to note before franchising a tech company, though.
The Tech Sector’s Great Variety
Choosing the right franchise for you will be a long selection process. Firstly, it’s a good idea to get acquainted with the main options the tech sector offers.
There are generally three categories, among which repair shops are the first and perhaps the greatest in number. Considering that we are living in economically volatile times, people are more careful with money, so device repairs are high in demand.
Secondly, companies offering to consult are growing in number as more and more small and medium-sized businesses need their services. Finally, digital marketing being the present and the future of marketing, it does not lag behind among franchises either.
Naturally, that is not all. Take a look at the top 10 best tech franchises of the last year, you will find interesting concepts like trade shops and the like, too. Determine which category is in the highest demand in your area.
The second important thing to consider is of financial nature. While franchising may seem simpler and more straightforward than starting up a business from scratch, it is not exactly cheap.
The up-front costs may be justified by faster payback, but that doesn’t mean that it won’t be a considerable investment. Franchise costs vary greatly. You may be able to get in the game for as little as $10,000, but the better-known franchises will have hefty fees.
In addition, the entry fee is just one thing to look out for, so you need to have ample legroom for further expenses. Needless to say, figuring out your budget from the get-go is thus paramount.
Additionally, don’t forget that every franchisee pays their due royalties to their franchisor, so you need to be okay with giving up a percentage of your revenue if you want to become a franchisee.
Skills and Qualifications
You may have chosen the tech sector due to this being your area of expertise. But it may also be simply because it’s a profitable sector. While it’s important that you have a good understanding of the industry in question, not all tech franchises will require a degree in the field in order to get into them.
While a business may specialize in a tech product or service, the actual running of the business might require an entirely different set of skills than those of an IT expert. Therefore, a well-known franchise in the food and drink industry might not have such vastly different requirements from one on the tech scene.
Both will most likely place great emphasis on drive and passion: in fact, many franchises will appreciate a willingness to learn over extensive experience. Therefore, getting into a tech franchise is not only about the schools you have finished and the degrees you have acquired. Your skills and interests are just as important, if not more.
Learning About The Franchise
Once you’ve narrowed down your search based on the previous criteria, you can start looking into the specifics. You need to know everything about the company in question before agreeing to any kind of commitment.
You want to get an idea about its development. Has it been experiencing consistent growth throughout the past years? Check how many new units the franchise has opened and you will know just how well it has been doing.
In addition, naturally, you need to learn about the finances of the franchise before buying into it. The financial records should be freely available to you so you can learn about the investment’s profitability.
Finally, your research session should place great emphasis on the background of the franchise. You are about to become a representative of this company, so its reputation will essentially be your reputation.
Lookup any negative experiences others have voiced. This is all valuable information that will paint an accurate picture of what you are about to get involved in.
Take The FDD Seriously
While some information, you’ll need to dig up yourself, a lot of important points will actually be found in the delicate document that is the FDD or franchise disclosure document.
Therefore, studying this document carefully is going to be crucial for determining just how good of a deal you are presented with. Things like protected territory, restricted covenants, renewal rights, and litigation cases are no joking matter. The FDD will also provide information about the expenses you can expect.
Finally, it’s also important to find out how much support you are to receive as a franchisee. To get even more valuable first-hand information, get in contact with other franchisees working at the same franchise. The FDD will tell you who they are so you can arrange a meeting.
At the end of the day, whether your decision to buy a tech franchise will be a lucrative one depends on you as much as it depends on the franchise you choose.
Your personality will play as big of a part as your skills and interests, so it does not matter how amazing a franchise opportunity is if the model simply does not reconcile with the way you do things.
However, if you don’t mind following the rules of a higher entity above you and find the safety of this model reassuring, acquiring a tech franchise may just be the best decision of your life.
So that’s all from this blog. I hope you enjoyed this article on the most important things to note before franchising a tech company. Thanks for reading!