7 Steps to Choosing the Franchise for You
Franchising is a wonderful way to go into business for yourself. So many things have already been established for your benefit: branding, marketing, processes, products, systems, etc.
Building a business through franchising has been so successful that franchised businesses generate jobs for more than 18 million Americans and account for 10 percent of the private-sector economic output, according to a study released by the International Franchise Association Educational Foundation.
If you’re convinced that you want to investigate franchising for your next career move, how do you go about finding just the right one?
Everyone has their own version of what you need to do to find that one, perfect concept for you and for your market. We’ve worked with thousands of people looking for the right franchise to realize their dreams and offer a great service to get you started learning about franchise opportunities.
Here are our recommendations for finding the one that suits you:
Step 1 – Take Stock of Yourself
Before you start looking at franchises, take stock of that most important component of the equation – you.
- What are your skills, experiences and interests?
- What did you like best and least about your past jobs? List them, then your own strengths and weaknesses in those jobs.
- How much money can you invest and how much would you like to make?
- Are you comfortable managing others or do you prefer to work alone?
- Where do you want to work? Are you willing to relocate?
- What hours are you willing to work while the business ramps up, and what lifestyle expectations do you have after it’s established?
- How do you feel about selling and the sales process?
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.
Step 2 – Research, and Keep an Open Mind
Whether you use a resource like our franchise selector or do your own research elsewhere online, keep all options open when considering a franchise.
If you’re inexperienced, you may think, “Well, I love donuts. How about a donut franchise?” And after spending days or weeks of research on Krispy Kreme, Dunkin’ Donuts and others, you might find you don’t have the required capital, the territory you want isn’t available, and you’d have to give up weekends to own a food franchise.
And don’t lock yourself into one or two concepts. If you think, “I’ll only look at ice cream and exercise franchises,” you could miss finding a gem that meshes perfectly with your needs.
With thousands of franchise companies available, keeping an open mind is the best strategy to get in on the ground floor of that new, hot concept or to find something that will really take off in your market.
Step 3 – First Contact
Let’s say you’ve found several promising franchises. What’s next?
Contact the franchisors and ask for information about their concepts. You’ll probably get call from someone in their development department who will gauge your interest and tell you if the territory you want is available. Thoroughly review the franchisor’s Web site 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 friendly and knowledgeable staff? 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’d get as one of its franchisees.
Step 4 – Read the FDD
Every franchise in the United States is required to provide an FDD (Franchise Disclosure Document, formerly the “Uniform Franchise Offering Circular”). Read it thoroughly. You’ll learn the franchisor’s history, training and marketing programs, and what costs, royalties and fees you’ll have to pay.
Some franchisors also include earnings claims in the FDD. These will help you estimate your business potential.
The FDD clearly explains the responsibilities of the franchisee (you) and the franchisor. Reviewing and understanding it is a very significant part of your research.
By paying attention to what you find in a company’s FDD, you can weed out franchises that just don’t measure up. Some warning signs are extensive litigation with franchisees or closing more outlets than opening new ones.
Step 5 – Talk with Existing Franchisees
Getting feedback from existing franchisees is one of the most important steps you can take to judge how happy you’ll be with a particular franchise.
They’re your best source of information about what really happens in the business day to day. Ask what they like and dislike, if they’re happy with corporate support, and even get a feel for their earnings.
Gather a variety of opinions and you’ll get a clear picture not only of the franchise itself but of how you’d fit into the organization.
Consulting a service like Franchise Business Review is an excellent way for you to get broad feedback from many more franchisees than you could ever contact yourself. Use these franchisee satisfaction reports to get an overall sense of the franchisor’s satisfaction rate, then drill down and talk directly to franchisees who are most like you.
Step 6 – Narrow the Field
It may not be easy, but it’s time to narrow down your choices. Let’s review what you’ve done so far:
- Made a list of your strengths, experiences and needs.
- Researched with an open mind, and found some promising companies.
- Requested information.
- Reviewed the UFOC.
- Talked with existing franchisees
Hopefully you’ve now found one or more companies that fill your needs.
Now it’s time to go to Discovery Day – an on-site meeting with the franchisor(s) you’ve chosen. There you’ll be introduced to the top people in the home office, and may visit a local franchisee, allowing you to ask even more questions and maybe get some hands-on experience with the business.
Discovery Days are very interesting and exciting. When you leave, you’ll have a good understanding of the franchise. Don’t forget they’ll also be evaluating you as thoroughly as you evaluate their business.
Step 7 – Making your Choice
As with any major decision, you’ll be filled with anticipation and anxiety, excitement and fear. Any or all of those are normal.
But if you’ve done your homework and followed these steps, you’ll be fully prepared and can be comfortable with your decision.
Congratulations – you’re ready to be a franchisee!