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10 Tips for selecting the Best Franchise

Guest post by: John Henning

Article Overview: Did you know that according to the U.S. Small Business Administration that 30% of all independent businesses fail in their first year? Yet less than 1% of all franchises fail in the first year. Pretty amazing, huh? Furthermore, a new franchise opens every 8 minutes in the U.S. There are more than 8 million people employed by U.S. franchisees. And franchisees in the U.S. produce over $800 billion in annual revenue! So now that you have made the decision to buy a franchise, what next? Which one do you choose? Here are 10 tips for selecting a franchise.

10 Tips for selecting the Best Franchise

Did you know that according to the U.S. Small Business Administration that 30% of all independent businesses fail in their first year? Yet less than 1% of all franchises fail in the first year. Pretty amazing, huh? Furthermore, a new franchise opens every 8 minutes in the U.S. There are more than 8 million people employed by U.S. franchisees. And franchisees in the U.S. produce over $800 billion in annual revenue!

So now that you have made the decision to buy a franchise, what next? Which one do you choose? Here are 10 tips for selecting a franchise.

1.Choose a proven franchise with a lengthy history of success. Enough said.

2. Make sure that the franchisor has a proven management team and is willing to give you and your team the necessary initial training for success. It's like if you buy a new car. Wouldn't you want someone to show you how to drive it?

3.Make sure that the franchisor is willing and able to be there for you in whatever capacity down the road. Service with a smile. Who is going to service your new car for you when it needs repair?

4.Research the franchisor's territorial rights thoroughly. Make sure there is no overlap between territories.

5.Research the franchisor's financial strength. Are they outgrowing their means?

6.Try to choose an industry that you are familiar with. If you have no automotive experience, then maybe that automotive repair franchise does not make the most sense.

7.Examine the initial franchise fees and future royalty payments. Does the benefit of owning a franchise outweigh the costs?

8.Talk to other franchisees. And don't talk to the ones that are recommended by the franchisor. Get a feel for their level of satisfaction, especially as it relates to ongoing support.

9.Get professional help (no, not a shrink!). I mean use your accountant and attorney. Odds are they have seen these type of opportunities before. If your attorney has not, there are many attorneys that specialize in franchise law.

10.Use your gut. Do what you think feels right. Do not necessarily believe what every franchisor tells you.

Good luck!

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Article Tags: tips on franchising



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Business Tips - How about: Tips for managers to handle employees more effectively? Tips on how to deal with difficult customers? Tips on how to deal more effectively with suppliers? The only three I have in mind right now, but will try to come up with something else. Chris
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.


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