Franchising is a great way to go into business for yourself. So many things have already been established for your benefit: branding, marketing, processes, products, systems, etc.
However, choosing a franchise is not an easy process, particularly you’re new in the business. So to investigate franchising as your next career move, how do you go about finding just the right one?
Although, you have your own version of choosing a franchise:
• the list of your preferences
• your perfect concepts
• and your market
Here then is our recommended approach of determining what to look for in a franchise that will meet your needs, expectations, and goals:
STEP 1: Evaluate Yourself Before Searching for A Franchise
Before you start looking at franchises, take stock of that most important component of the equation – YOU.
By starting with a list of what you have to offer and what you need from a business, you can create a strategy and model for your research.
Bonus read: “First Steps Before You Search For A Franchise”
STEP 2: Conduct A Franchise Research
Keep an open mind. Whether (at Step 1) you use a resource like FranChoice or do your own franchise research via the Internet, it is best to keep all options open when considering a franchise.
However, an inexperienced person may approach the process by thinking, “Well, I love donuts. How about a donut franchise?” And after spending days or weeks of research on Krispy Kreme, Dunkin’ Donuts, and others, the individual may find…
• he doesn’t have the required capital,
• the territory he wants is not available,
• and he’d have to give up weekends if owning a food franchise.
Another ineffective way to begin your franchise research is to lock yourself into one or two concepts. If you think, “I’ll only look at ice cream and exercise franchises,” you may miss finding that gem of a concept that would mesh perfectly with your needs.
With thousands of franchise companies available, keeping an open mind is the best strategy you can employ to get on the ground floor of that new, hot concept or to find something that will really take off in your market.
STEP 3: Contact The Franchisors And Request Their Concepts
Let’s say you’ve found an assortment of franchises that look promising. What do you do next?
Contact the franchisors and request information about their concepts.
You will probably get calls from someone in the franchise development department who will gauge your interest and advise you if the territory you seek is available. You will want to thoroughly view the website information and any brochures and videos they send you.
Keep notes on your impressions.
• Are their materials professional and up-to-date?
• Are you treated courteously by a friendly and knowledgeable member of the corporate office?
• Are your questions and concerns answered to your satisfaction?
What you see from the company at this time may be an indication of the type of support you would receive as a franchisee in their system.
STEP 4: Read the Company's FDD
Your next step is to read the company’s FDD (Franchise Disclosure Document), a document every franchise in the United States is required to provide. From this, you will learn:
• the history of the company,
• training program
• marketing program
• the capital costs, royalties, and fees you will be required to pay.
Some franchisors also provide earnings claims in the FDD that will help you estimate the potential of the business.
The FDD is full of information about the franchise and it clearly explains the responsibilities of the franchisee (you) and the franchisor. Your FDD review and understanding are a very significant part of the research process.
By paying attention to what you discover in a company’s FDD, you can weed out franchises that just don’t measure up. Some warning signs of a franchise that is facing challenges are extensive litigation with franchisees or a closing rate of units greater than what’s being opened
STEP 5: Speak With Existing Franchisees
We consider this step to be of monumental importance when judging the likelihood of finding happiness in a particular franchise: CALL EXISTING FRANCHISEES!
Existing franchisees are your best source of information for finding out what really happens in a business on a day-to-day basis. You can ask what they like and dislike about the business if they are happy with corporate support, and even get a feel for the type of earnings a franchise makes.
Gather a variety of opinions and you’ll get a clear picture of not only the franchise itself but of how you’d fit into the organization. That is why this step is so significant to your being able to make a definitive decision of choosing a franchise.
STEP 6: Narrow Down Your Choices
After you investigate each franchise company on your list, the 6th step would be a lot easier so far. You will now need to select from those franchise companies – a few that match your needs.
So let’s review what you have done so far.
1. Make a list of your strengths, experiences, and needs.
2. While keeping an open mind, found some companies that look promising
3. Requested information
4. Reviewed the FDD
5. Talked with existing franchisees
When you’ve made it this far, you are one step closer to the final step of choosing a franchise to buy.
But before it will take place, you need to go for a Discovery Day. It is an on-site meeting with a franchisor.
At this meeting, you will be introduced to the top people in the home office and you may make a visit to a local franchisee, allowing you to ask even more questions and maybe to get some hands-on experience with the business.
Discovery Days are very interesting and exciting. When you leave, you will have a good understanding of the franchise.
Don’t forget that this is a two-way street. They’ll be evaluating you as thoroughly as you evaluate their business.
STEP 7: Make your Final- Choose A Franchise To Buy!
The last step, of course, is making the final decision of choosing a franchise to buy.
Like any major decision, you will be filled with anticipation and anxiety, excitement and fear. Those are very normal feelings, experienced by almost everyone who is ready to buy a franchise. Be passionate about the opportunity while choosing the right one.
Many opportunities exist for those interested in owning their own successful business.
When deciding on the type of business to pursue, it is essential to thoroughly understand all associated operating costs and the total initial investment or start-up costs. And with the help of a franchise consultant, you can find the right franchise to invest in.
After all, is said and done it’s important to remember that this choice can either make or break your career as an entrepreneur or lead you down a path of success.
But if you’ve done your homework and followed the steps as outlined, you should be very comfortable with your decision. Congratulations – you’re ready to be a franchisee!