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The process of finding and opening a franchise can seem long and confusing. Likely because of this, many people rush through the process and risk ending up unhappy with their choice, running an unsuccessful business, or both.
We’ve put together a list of seven steps that all prospective franchisees should take. Following this roadmap will not guarantee your franchise is a success, but it will improve your chances by ensuring that you consider all of the opportunities before jumping in.
Step 1: Recognize that you’re interested in opening a franchise
Every current franchise owner decided at some point that the franchise model was right for them. There are many ways to open a business, and franchising is just one of them. It’s important that you consider the franchise model in general before you focus on particular franchises.
Of course, there are many different types of franchises. Some franchises allow you to work from home, putting in just a few hours per week; others require you to be at the workplace for 40 or more hours per week. But all franchises share general features. All franchisees ultimately answer to the franchisor, and all franchisees benefit from the franchisor’s brand, network and resources.
Step 2: Figure out which industries you’re interested in and how much you can invest
There are franchises in every major industry from food to healthcare, from automobile repair to education. Try to narrow down the industries in which you would work well, but remember that you can always consider various franchises in different industries. Everyone has diverse interests, and there’s no need to pigeonhole yourself this early in the process.
Franchises can vary just as widely in how much capital you’ll need to invest, and most industries tend to cluster around similar investment levels. Full-service restaurants tend to be among the most expensive and can require upwards of $500,000. Meanwhile, there are business services franchises you can run from a home office, and those can require as little as $25,000. How much capital you have available to invest may be an important factor in which industries are most attractive to you.
Step 3: Consider several possible franchises (take the Franchise Quiz!)
It’s important that you cast a wide net rather than just focusing on the few big-name franchises you’re most familiar with. There are many up-and-coming franchises that you’ve likely never heard of, and some of those opportunities might fit you perfectly. Of course, it can seem difficult to find the small- and medium-sized franchises, but don’t worry. There are several businesses that work to connect interested people with brands, and they do it all for free.
A great place to start is FranchiseHelp’s Franchise Ownership Quiz. After a few questions, they’ll provide you with a long list of options from which to choose.
As you sift through franchises, make a list of all the brands in which you have at least some interest. An opportunity that seems only OK at first might turn out, on closer inspection, to have the perfect structure for your lifestyle.
Step 4: Make a shortlist
It’s time to start assembling a shortlist of franchises. Take your long list of franchises and start to investigate how each franchise works. Where will your revenue come from? How much time will you spend setting up the franchise? How much time will you spend working on the franchise each week? Can you work from home? How many (if any) employees will you have?
As you begin to figure out which franchise models fit you best, you might have to go back to step three and consider more options. That’s fine—in fact, that’s good. It means that you’re learning about the different businesses that are available and what kind of franchise owner you want to be.
Step 5: Narrow your shortlist by talking to franchisors and current owners
Now that you have a shortlist of franchises, you should begin to narrow down your list. Ultimately, you’re trying to narrow your list down to the franchise that you’ll open. Be sure to think carefully in this stage: weigh the benefits and costs of each option, and consider the sort of owner you want to be.
To help you narrow down your shortlist, you should talk to current franchise owners. Better than anyone else, they’ll be able to tell you about the day-to-day life of a franchisee, the strengths and challenges of their business and their relationship with the franchisor. All this information will be essential to you as you consider each franchise.
Step 6: After picking a franchise, visualize your life as an owner
You will have already done some of this in step five when you were narrowing your shortlist. But once you pick the franchise that you want to open, you should spend a good deal of time focusing on what your life will be like if everything goes according to plan. How much time will you spend with customers? How much time will you spend working on back-end management? How much time will you spend hiring and managing employees?
Once you have a firm sense of what your life will look like as an owner, take time to consider again whether your strengths match the demands of the job. If you have serious hesitations, then you should think about returning to Step 3 and look at other options. If you think that you’ve found the right franchise, then go ahead and take the final step.
Step 7: Contact the franchisor to schedule a discovery day
Once you think that you have found the franchise that’s right for you, reach out to the franchisor and schedule a Discovery Day. On your Discovery Day, you’ll visit in-person to see a current franchise, where you’ll have an opportunity to ask the franchisor any questions you still have.
Choosing the right franchise is a difficult but exciting process. Remember to take your time. If you consider—deliberately and carefully—all of your options, you’ll be able to make the most informed decision and set yourself up to run a successful business.