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Finding the Right Franchise For You

Written by: Ed Teixeira

Article Overview: Every day untold numbers of people seek a franchise opportunity where they can invest their money and become successful. This article provides a process which can help individuals choose a franchise that fits their profile and expectations.

Finding the Right Franchise For You


Buying a franchise can be the most important decision a person makes. For some people it means investing all the money they have. If you have an interest in buying a franchise, its important to understand that there is a process that should be followed.
This is the first of two articles pertaining to buying a franchise. In this initial article I’ll present the best way to select a franchise. The next article will explain how to evaluate a franchise opportunity.

Franchise industry sources indicate that there are over 2,500 franchises available in North America. Given the numbers of franchises, it can be a daunting task to select and evaluate the best franchise to fit your profile and expectations.
Choosing a franchise is the first part of the franchising process and there are three factors that should be guiding your decision:

1. Use objectivity when choosing a franchise.
When choosing a franchise avoid the tendency to choose a franchise based upon sizzle or glamour. Some franchises are heavily promoted but don’t use that as the sole indication that it’s a good franchise opportunity. Be cautious and be sure that the franchise is a business you can operate. If your background is in technical services and you feel uncomfortable making sales calls, then perhaps a business, which requires direct sales, might not be your best choice. If, however, you have a sales personality and enjoy interacting with people and selling, then you might be better off dealing with a service franchise, which requires those kinds of skills and experience. Your first approach is to consider those franchise categories that provide you comfort and demonstrate an opportunity for growth. The industry that the franchise is in should be part of your decision. For example, home healthcare and children’s services are hot industries.
2. Be sure you have the experience and knowledge required to operate the franchise you select.
Don’t end up being a “fish out of water” by getting involved with a franchise that is “foreign” to you. This does not alter the fact that many franchises are “cookie-cutter” in design, which means the operation is very structured. Nevertheless, people and management skills are an important component of any business operation no matter how well organized. If you don’t have the skills to operate the franchise, you may be forced to depend upon someone else. When you depend upon someone else, there could be a point in time when this person becomes so important to the business that he or she could literally hold you hostage.
3. Have the right amount of working capital available to invest in the franchise you select.
You need to have the right amount of capital necessary to start-up and operate the franchise. I would always suggest to prospective franchisees that whatever their cash flow model shows, that they put in a risk factor of ten percent or more for unexpected contingencies. Some cash flow statements are overly optimistic and don’t allow for a margin of error. In the real world, unanticipated events happen and one must be prepared for these events. Your available working capital will determine the kind of franchise you will be acquiring.

Once you fulfill your selection parameters, you can look at the franchise opportunities that fit the guidelines.
There are many resources available for identifying franchise opportunities. The Internet is an excellent vehicle for finding franchises. If you attend a franchise show you will have the opportunity to meet franchisor representatives face-to-face and this can provide you some experience. Even though, most franchises are not represented at these shows you may find one or two franchises that interest you.
If you have a specific franchise in mind, a franchise show may provide you the opportunity to visit this franchise in person. There are franchise publications that present franchise opportunities, which include descriptions of each franchise. I recommend that your first step should be to identify the industry segment, service or product that you are interested in. Select two or three franchises from that family group and then contact each franchisor to get preliminary information.

Following are the steps to follow:
1. In view of your experience and working capital, eliminate those franchises that do not qualify. As an example, if you don’t have financial experience or training, you can eliminate accounting and tax services. If your background and experience are non-technical, you may be quick to eliminate automotive services. In terms of working capital, you could rule out hotel franchises and high-end restaurants.
2. Choose franchise categories that appeal to you from a product or service standpoint and which are compatible with your business background and investment capability. Keep in mind that you can also use the Internet to do a search as well.
3. Once you narrow your choices down to particular franchises, you can use the Internet to review the franchise program since franchisors have their own website. This provides you a way to browse through franchise sites where you can request information online. You’ll also find out if certain territories are already franchised.
4. Review the information you’ve requested to see if it meets the criteria of your interest, experience and capital. Once you’ve narrowed your choices, you will want to speak to a franchisor salesperson in order to ask some key questions. With e-mail, you have the option of e-mailing direct questions to the salesperson.

Following are some questions you’ll want to have answered:

· Is your territory available? How are territories defined? Are they
exclusive?
· How would you describe the franchise process?
· What are the steps that are followed?
· What is the initial franchise fee? What do you receive?
· What is the investment? What is the ongoing royalty?
· Any other fees, such as for advertising fund?
· Briefly describe the support you will receive pre-opening and post-
opening.
· How many franchise locations have been added to the system in the past
year? Any corporate-owned locations, and if yes, how many?


This is the information you’ll want to obtain at this stage in the process. The next step will be to evaluate the franchises that you choose so that you’ll make an informed decision and choose the best franchise for you.

Related Articles
  Steps to a Successful Franchise Experience
  Franchising with all its Success
  Why Franchisees Should Consider Using a Franchise Broker
  Be in Business for yourself, but not by yourself
  Top tips for franchise success

Article Tags: franchise opportunity, franchisor representatives



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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