10 Steps to Research a Franchise
Doing Your Homework Ahead of Time Leads to Greater Business Success
If you've been dazzled by the notion of franchise success, and it does offer greater success than a stand-alone business, don't make the mistake of thinking it's easier.
You still have to work hard to get your franchise business up and running. Of course, you'll have your franchisor there to help you from the get-go. But when it comes to buying a franchise, you're on your own. Here are 10 questions to help you determine which franchise might work best for you.
- Why do you want to buy a franchise? Are you joining this area because you want to live the American dream of owning a business or because you want your skills and experience to work for yourself?
- What experiences and skills do you bring to the table? Do you have administrative skills or flair for sales? Then retail franchise concepts can be a good idea. Similarly, people with good communication skills can do well in business-related services.
- How do questions 1 and 2 point me to a franchise industry? Now, start looking at the different franchise opportunities under it. You can then further narrow down your choice based on how much time you can commit for the business. For example, if you are reluctant to leave your present job, you can look at franchise business for sale offers from franchisors that allow passive ownership.
- What budget do I have to start a franchise? Go for franchises that are somewhere within your budget. But, going for franchises that are too near your budget is not a good idea. Then you cannot have money for emergency situations. Also, buy a franchise of a company that has some brand image in the market. Remember, it's not always best to go for the cheapest. And don't let money hold you back. You may have more resources to finance your franchise than you think.
- What does the Franchise Disclosure Document (FDD) tell me? Look at the different sections thoroughly such as the section on the litigation history, the history of its employees and parent company. Also, look at the fees and support/training offered. Read more about the FDD.
- How do my choices compare to each other in these areas? Don’t always go for the one that has the lowest start-up cost. Make sure that the training and support system is also comprehensive and thorough. Another thing to compare is the royalty fee.Franchises with a low royalty fee, which you pay based on your continuing sales, but higher franchise fee is better than the opposite.
- Can I narrow these to two solid choices? It’s better to have two choices, because given the demand of franchising in the market; your chosen franchise may not be available in your area. So, always have a back up franchise concept.
- When is the next Discovery Day? This is a time when potential franchisees travel to meet with the franchisors to lear more about the business. Note the running of the business and how they handle your queries.
- What do present and ex franchisees say about the company? Also, check out the market presence of the franchisor and the demand in your market.
- What does the franchise agreement tell me? Use a competent franchise attorney. Always notice which one is offering protected territory. After thorough reading and comparing the two, choose the one that’s best for you. Now your research is over and you are ready to buy a franchise.
The copyright of the article 10 Steps to Research a Franchise in Small/Home Business is owned by Sandy Smith. Permission to republish 10 Steps to Research a Franchise must be granted by the author in writing.
