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Choosing the Right Franchise

Written by: Sebastien Page

Article Overview: After much thought and deliberation, you’ve finally decided to take the plunge into the world of franchise, as you truly believe that it is the way to a successful future. However, one crucial decision remains to be made. Which Franchise is the right one for you?

Choosing the Right Franchise

After much thought and deliberation, you’ve finally decided to take the plunge into the world of franchise, as you truly believe that it is the way to a successful future. However, one crucial decision remains to be made. Which Franchise is the right one for you?
There are certain things to consider before making this important decision :

1.Are there certain products which you would prefer to sell?
Determine your preferences and try to go for a franchise where whatever experience you have is at least, slightly relevant to its industry. An unpleasant scenario for your franchising business would be investing your time and effort into a business, only to find that you receive no joy from it. At the same time, selling this business would be difficult, if you were unable to make sufficient profits as a result of your boredom with it. Do you really want to see your business venture turn into a joyless task, where you simply aspire to pay off your franchise fee?

2.What’s the amount of money available for investment?
The amount of money available on hand for the investment and finance of a franchise is one of the most important factors you have to consider. Despite how much you may be attracted to a certain franchise, if you can’t muster up the funds necessary, then your choice is likely to backfire.

3.What other costs are to be expected?
Money spent on buying a franchise isn’t the end of your expenditure. Estimate how much money is required for other aspects usually involved in franchising, between promotion, insurance, training etc. Leave no room for surprise expenses.

4. How long has this franchise been in business?
Has this franchise company existed for a few years now, or is it a new business? Do they have a history of opening successful franchises and what are the demographics involved? How reputable is it?

5. How frequent do the team players change?
Just how stable has this company’s staff been? Have there been many changes in the faces of those in charge? Watch out for a history of lawsuits or even bankruptcy in the disclosure document.

6. Does this franchise have a history of success?
Take a look at the history of the franchise company’s franchisees. How many of them have found success and how many of these businesses have bitten the dust? Ask for the contact information of previous franchisees and be sure to get in touch with them and ask for their point of view, regarding their experience with the company.

7. If training is required, will it be available?
Inquire about the availability of training and whether it constitutes a part of your franchise fee. What kind of help does this training include and what kind of instructional help is offered in the future?

8. What is the minimum distance allowed by the franchiser between your shop and another franchisee’s shop?

9. Should all your required supplies, tools, products etc. be purchased from the main franchise company?
If this is the case, make sure to accurately compare the prices of the franchise company with the retail prices of the same products. If the franchise company’s prices are higher, then it would be unreasonable to assume that working under these circumstances will turn in a good profit.

10. What ownership rights does the contract provide?
You have to make yourself aware of how far your ownership extends, exactly. You should be aware of what your choices are after the expiration of your contract. Will it be renewed by the company, if you want to continue? You also have to know if there is room for converting your business into an independent one, if you wish to in the future.

11. Make note of the legal aspect of things and how future disputes that may arise, will be handled. It is necessary to look at the fine print and understand the contract clauses involving arbitration, such as where the hearings are to be held.

12.How selective is the franchise company in choosing its franchisees?

Does this company have a history of choosing franchisees who only live up to certain criteria? Or does is it simply on the hunt for as many franchise fees as possible?

13.Is this company known for pressuring franchisees into signing contracts?

14. Do you find yourself wary of the people you’re doing business with or do you like them well enough?

15. Is the local market big enough to accommodate the products and services of the franchise and just how competitive is this market?

Related Articles
  Selling to Hostile Franchise Buyers is Never a Good Idea
  Which Franchise is right for you How do you choose
  Top tips for franchise success
  Why You Should Work With a Franchise Consultant
  Questions to Ask Before Buying a Franchise

Article Tags: amount of money, boredom, business venture, buying a franchise, decision 1, deliberation, demographics, faces, franchise company, franchise fee, franchising business, important factors, insurance training, new business, plunge, profits, promotion insurance, stable, successful franchises, surprise



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.
Re: Info for would be franchisers... - [quote="Sebastien":2gam0klq][quote="BuzzAroundBooks":2gam0klq]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to.[/quote:2gam0klq][/quote:2gam0klq] That is really what I look for in any industry publication. We lead busy lives and when people fill their magazines with fluff, not only does it benefit no one, but it makes us truly appreciate those that don't. Thanks!


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