"Akamai Money" seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to business@staradvertiser.com and put "Akamai Money" in the subject line.
Question: Where do you begin when choosing a franchise? What are some of the key things you should look for before investing in a franchise?
Answer: Start by building a business model for your ideal business. Think about what you are strong at and want to get up and do every day (sales, marketing, management, etc.). How many employees do you prefer? What type of employees (white-collar versus blue-collar)? Do you prefer retail-based or maybe home-based? Create a "must have" and a "like to have" list and make sure you compare any business to the items on your list. The more it matches up, the better the fit.
PROFILE
CHAD WRIGHT
» Company: FranNet of Hawaii
» Title: Director of franchise development
» Age: 32
» Education: B.B.A. in Finance from the University of Kentucky
» Contact info: 800-372-6638, cwright@frannet.com
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Q: How much money should you have when starting a franchise?
A: I advise to have at least eight to 12 months of personal living expenses set aside to help you pay your bills during the ramp-up time of the business.
Q: What are the risks involved in being a franchisee?
A: Most of the risk for franchisees occurs during the first few years of the business while things are ramping up. The "safety and security" of the full-time job is not there, but as you grow your business no one can take it away from you. You cannot be downsized, transferred or fired.
Q: What are the advantages/disadvantages between a franchise and starting a business from scratch?
A: Starting a business from scratch: You have total control, you make all the decisions, keep all the profits and truly have the biggest upside. The disadvantages are that you must create all the systems, you have no one to turn to for help, there are limited financing options, takes years before you make money, and has the highest failure rate when compared to buying a franchise.
Buying a franchise: You have a proven, time-tested business model that works, predictable future results, very attractive to lenders, recognized brand name and turnkey operations. Disadvantages: paying a franchise fee, royalties, there are an endless number of concepts to choose from.
Q: How do you know if you have the right business fit?
A: When the business matches up with the business model you created and will help you achieve the goals you have laid out for your future.
