If you're thinking of investing in a franchise, the first thing you must do is learn how to start looking. Your chance of success as a franchise entrepreneur will increase if you carefully research the best franchises.
Not all franchise opportunities are equal. Although many reputable companies use the franchise model, some lead the field. They've perfected franchising, riding on a powerful consumer trend that will only continue to grow every passing year. It's these franchises that you want to find.
Your personal knowledge, aptitude, skills, and life experiences will also play a huge role in your selection. If you're returning back to civilian life after serving in the military, then you should look for veteran franchise opportunities.
4 Research Tips
Here are some research tips to help you sift and sort through good franchises to find one that is great for you:
1. Decide what to sell
Do you prefer selling products or services? Would you rather have a retail business or be out there in the field?
With so many franchise opportunities available there appears to be something for everyone. There are franchises for people who love animals and want to groom dogs, for people who love numbers and want to help others manage taxes, and for people who love pizzas and want to manage a specialty pizza parlor. If you name any successful business model, there is probably a franchise for it.
So, before deciding what franchise to look for, start by getting clear on your own interests.
2. Look for the hard data
When you start to visit franchisors, they will show you glossy brochures; speak directly to your desires for financial freedom, independence, and personal success; and impress you with superb PowerPoint presentations. While all this is fine, you need to peek behind the marketing curtains.
Once you've found one that you like, ask for the Franchise Disclosure Document (FDD). Franchisors are legally required to share this with you upon request. Once you get your hands on it, read it from cover to cover. Avoid the temptation to skim through it as it is written in a highly formal way and uses an abundance of technical words and phrases. Since you are unlikely to understand every word of it if you're not familiar with the franchise industry, then ask a franchise attorney to explain the more obscure parts of it.
3, Interview the franchisor
When sitting down with the franchisor, you need to ask about the franchisor's primary focus, why certain franchisees didn't succeed in the business, and what steps are taken to resolve conflicts of interests between franchisors and franchisees.
The answers you get to these and other probing questions will give you a deep insight into the company's integrity and how much effort they are willing to make to ensure that their franchisees are successful.
4. Interview the franchisees
By also talking to the franchisees, you'll get a new perspective on what the business is like. Ask them how prepared they were to run a business when they first started, how effectively they managed to get customers, the day-to-day business reality that they experienced, and so on. Also, dig deep into the real costs and profits of the business.
Usually, you will not get all your questions answered by only one or two franchisees, so you should talk to at least five. While some franchisees will give you politically correct answers, others will open up and give you a frank review of the business.
You need the real story of how much it really costs to get started, including the incidental expenses. You also need to know how long it will take for the business to be profitable, and you need to know how much you can realistically expect to make.
Reflect On Your Research
After reading the FDD and interviewing the Franchisor and franchisees, you will have a fairly good idea of what is necessary to get the job done. Now, it's important to reflect on your research and decide whether you fit the profile of a successful franchisee. While it is theoretically possible to alter your personality to fit in with the opportunity, your chances of success will increase significantly if your strengths and the opportunity align.