Franchising can be a great way to start your own business. It provides a proven business model, training, and support from the franchisor, and the opportunity to tap into an established brand. But with so many franchises available, how do you choose the right one for your business goals? Is it better to focus on a national brand (which may cost you more money and resources to get into), or should you work with a franchisor that (while well established) has more territories available?
In this blog post, we'll provide some tips to help you make an informed decision.
1. Identify Your Goals:
Before you start researching franchise opportunities, it's important to identify your goals. Sit down and actually write these out. Start with this list of questions to get yourself going (go ahead and print them out, we're cool with it):
What do you hope to achieve by owning a franchise?
What are your goals for owning a business? Do you want to be your own boss, build wealth, or create a legacy for your family?
Are you looking to make a significant income, build a business to pass down to your children, or fulfill a lifelong dream of being your own boss?
What are your strengths and weaknesses (yes, we ALL have some) as a business owner? Are you good at managing employees, marketing, or financials? Are you good at taking orders from other stakeholders (your franchisor, and your future customers)?
How much time and money are you willing to invest in a franchise? Do you have the financial resources to buy and operate a franchise?
What type of franchise are you interested in? Do you want a food-based franchise, a retail franchise, or a service-based franchise?
What are your long-term goals for the franchise? Do you want to own multiple units, sell the franchise after a certain period of time, or continue to operate the franchise indefinitely?
What is your risk tolerance? Are you comfortable taking on debt to start a franchise, or do you prefer a lower-risk investment?
What is your exit strategy? Do you plan to pass the franchise on to family members or sell it to another franchisee or investor?
By answering these questions, you (as a potential franchisee) can gain a better understanding of your goals and motivations for owning a franchise. This information can help guide you in choosing the right franchise that aligns with your business goals and personal values.
Once you have a clear understanding of your goals, you can narrow down your search to franchises that align with them.
If you need help answering these questions, go ahead and contact us, we can help.
2. Research Your Options:
Once you have identified your goals, it's time to start researching your options. You can start by looking at the International Franchise Association's website (more on this below), which has a directory of franchises. You can also attend franchise expos, franchise conventions, talk to franchisees, talk to us or do more research online. Look for franchises that have a proven track record of success and that align with your goals.
(More info on the IFA, just like we promised) The International Franchise Association (IFA), which you can find here (www.franchise.org), is a non-profit trade association that represents franchisors, franchisees, and suppliers in the franchising industry. Their website is a great resource for anyone interested in franchising, whether you're a prospective franchisee or an established franchisor.
On the IFA website, you can find information on:
Franchise Opportunities: The IFA has a directory of franchise opportunities that you can search through by industry, investment level, and location. You can also find information on franchise conferences and events, as well as news and articles related to franchising.
Franchise Regulations: The IFA works to protect and promote franchising as a business model, and part of their mission is advocating for fair and balanced franchise regulations at the state and federal level. On their website, you can find information on current and pending franchise legislation, as well as resources for franchise advocacy.
Franchise Research and Education: The IFA offers research and education on franchising, including publications, webinars, and online courses. This can be valuable for both prospective franchisees and franchisors looking to improve their businesses.
Franchisee and Franchisor Resources: The IFA offers a variety of resources for both franchisees and franchisors, including legal and financial resources, marketing and advertising resources, and resources for international franchising.
Overall, the IFA website is a great starting point for anyone interested in franchising. It offers a wealth of information on franchising opportunities, regulations, research, and resources that can help you make informed decisions about your franchise business.
3. Evaluate the Franchise's Business Model:
Once you have a list of potential franchises, it's time to evaluate their business models. Look for franchises that have a system that has been proven to work. You should also consider whether the franchise is recession-proof or if it is affected by economic downturns. Additionally, consider the level of support the franchisor offers.
Here is an important question to ask yourself: does the franchisor offer comprehensive training, ongoing support, and marketing assistance?
Contacting franchise brokers can be a useful way to learn about franchisor business models. Brokers are typically knowledgeable about different franchise opportunities and can provide information on the requirements and financial obligations involved in owning a franchise. They can also offer insights into the support and training that franchisors provide to their franchisees.
To find a reputable franchise broker, you can contact us (we have a list of brokers we have worked with), search online, or ask for recommendations from other business owners or industry professionals. Once you have identified potential brokers, you can reach out to them to schedule a consultation to discuss your goals and interests. Be sure to ask specific questions about the franchisor's business model, including their marketing strategies, operational procedures, and ongoing support for franchisees.
4. Consider the Costs:
Before making a decision, it's important to consider the costs associated with owning a franchise. This includes the initial franchise fee, ongoing royalties, advertising fees, and any other fees the franchisor may charge. You should also consider the cost of real estate, inventory, and equipment. You will want to have a clear understanding of the total investment required to open and operate the franchise.
5. Talk to Other Franchisees:
One of the best ways to evaluate a franchise is to talk to other franchisees. Ask about their experience with the franchise, how much support they received from the franchisor, and if they would recommend the franchise to others. You can also ask about their financial performance to get a better understanding of the earning potential of the franchise.
6. Meet with the Franchisor:
Once you have narrowed down your options, it's important to meet with the franchisor. This is an opportunity to ask questions, learn more about the franchise, and get a better understanding of the support and training they offer. You should also review the Franchise Disclosure Document (FDD) with a franchise attorney to ensure you understand the terms of the franchise agreement.
Choosing the right franchise for your business goals requires research, evaluation, and due diligence. By following these tips, you can make an informed decision and choose a franchise that aligns with your goals, offers a proven business model, and provides the support and training you need to succeed. Remember to take your time, ask questions, and evaluate the franchise's performance and costs before making a decision.
If you need help, more information, or if you have questions about the franchise process, do not hesitate to contact us.