3 tips for successful franchise ownership

Franchises can offer entrepreneurs lower-risk, turnkey opportunities for business ownership. But even if you have the funds and have done your research, many challenges await. To be a successful franchise owner, you also need to:

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1. Know yourself. Not every entrepreneur is cut out for franchise ownership. Franchises are structured systems, so owners who are willing to follow rules and listen to feedback are more likely to be successful than those who are independent and become stubborn in the face of criticism. Having a background in business operations, marketing or the military may be an advantage.

2. Be realistic about profits. Your franchise is unlikely to be profitable the first year — or even longer. Once established, franchises with higher initial investments tend to be more lucrative. According to the Franchise Business Review, the average food franchise owner pays an initial investment of $450,000 and makes $88,000 in annual profits.

3. Get expert advice. Even if you have an extensive business background, enlist the help of professional advisors. A lawyer should review your franchise agreement and a CPA should provide accounting, tax and, possibly, operations guidance.

Other articles in the September 2013 Edition of Business Matters: