Choosing a Retail Franchise
An analysis of the pros and cons
Retail franchising is the kind of business operation that most people are familiar with today. After all, everybody knows McDonald's and Taco Bell, but there's much more to know about retail franchising.
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, take a look at the crowded playing field. Retail franchises are available in everything from QSR (quick serve restaurants), to dry cleaning stores, to appliance and furniture rental stores. There are literally thousands of opportunities. Often, brand recognition makes this kind of franchising very popular, but that big brand name can come with a price. Capital investment and start-up costs for some retail franchise brands can easily top $500,000, and up. But properly executed, the potential payoff can be significant.
Retail Franchising 101
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 fiscally 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 your self 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. You'll also want to choose a retail franchise concept that would fit your market. For example, if you live in a colder-climate northern state, that has short summers, a frozen yogurt franchise might not be such a good choice. But, perhaps, hot sub sandwiches would be in high demand more consistently.
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, brick and mortar retail locations require building, remodeling, maintenance, and updating from time to time. There's 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.