When considering becoming a franchisee, how do you decide which franchise is right for you? This is a very common question, and your individual answer is going to depend on what types of things are most important to you, both personally and professionally. There are many factors in deciding which franchise is best for you to own and so many questions that need to be asked when sifting through the hundreds of different options. Since I’m the type of person that loves to answer questions by asking questions—let’s do it my way.
The first and most important question is to you: Am I passionate about this type of business? In any job or career, the most important factor is passion. In my opinion, this is even more important when opening a business. Our most successful franchisees are passionate about what they do. They enjoy the business and it interests them almost like a hobby would. If you’re not passionate, then the chances of you putting in the hard work necessary to make your business successful are slim.
After confirming what you are passionate about, you should ask yourself: Where do I want to be every day? Is this business a lifestyle fit? Do I want to work from home or at an office/store? Do I want an online or brick and mortar business? Is my goal to become a multi-unit owner? You will be spending a lot of time with your business so make sure you’re happy to be there every day.
The next question you should ask is: How much money do I want to invest? This needs to be an amount you’re comfortable with. If you invest on a level that makes you uncomfortable, it will impact your ability to run your business effectively. The stress and worry will ultimately lead to failure. Know how much money you want to invest and in turn, how much money you need to make to continue living the lifestyle you want.
In turn, the next question is: How much money can I earn in this business? This is a very important question and can be the most difficult to answer. Franchisors are limited by the Federal Trade Commission on what financial information they can share, but they can include in their Federal Disclosure Document what is known as a Financial Performance Representation, or FPR. This can be a key factor in deciding which franchise to pursue. But be careful, this is only a representation and should not be the deciding factor of your decision. Some companies choose NOT to include a FPR thus raising a red flag. When reading a FPR, make sure to understand what exactly is being presented. Some franchisors will disclose different data so be aware of what information they are actually sharing: gross profits, net profits, projections, et cetera. You may need more information from the franchisor to be able to use this to your benefit. If they give you average gross sale figures you will need to find out average gross margins and expenses to understand the earning potential.
The final question you should ask yourself is: What qualities should I look for in a Franchisor?Essentially this franchise will be your business partner and there are certain qualities to look for in searching for people to do business with. Ask these character questions:
1. How accessible are they? When you’re new in the system you’ll be contacting your support team quite frequently for help, sometimes as an emergency. If they aren’t readily available or easily contacted you’ll be left picking up the pieces to your business solo.
2. Do they give Real Estate assistance? Finding the right space and negotiating a favorable lease can raise your bottom line by thousands of dollars annually. Having a professional, experienced broker assisting you can save your business in the long run.
3. What marketing support will I receive? Marketing your business is without question a necessity. Having an innovative marketing department will grow your business from a new store to an established, successful store. Be sure to talk about their strategies and look at marketing materials.
4. What kind of training will I receive? Knowing how to run your business is obviously very important and some franchisors are happy to receive your franchise fee check and leave it at that. Be sure and look for online training support as well as classroom/store training. Make sure there is ongoing training as well. Every franchisee can learn and become better. Make sure there is an opportunity to learn from other franchisees in the system and at annual meetings to help build relationships with other franchise members.
These are just a few of the most important questions to ask when searching for the right franchise. There is a lot of research to be done in deciding which one is right for you. Be sure and talk to as many existing franchisees as possible and maybe be even spend a day shadowing someone in the business to get an idea of the day-to-day activities. Ultimately, the existing franchisees will give you the most accurate representation of the business.
Good luck in your quest!