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5 Things to think about when Researching A Franchise

Guest post by: Nick Strong

Article Overview: Franchising appears to be a minefield, so how does one sift the good from the bad? Some basic checks can help avoid many of the pitfalls and get you well on your way to starting a new business.

5 Things to think about when Researching A Franchise

You can usually discover many horror stories on the internet on the subject of people taking on a franchise business and losing out as a rogue franchiser takes off together with their cash. It's true that this happens but on the other side of the coin there are profitable franchisees trading today with excellent lucrative businesses. It might look as if some are fortunate and some are not, nonetheless there are various routes you can think about during the investing process of the franchise business to lessen the possiblity of hitting on a 'rogue' franchisor and maximise the potential of you turning into a of the success stories.

Consider these 5 pointers when looking at a franchise system of appeal.

1. Relevant opinions

Who better to talk to about if a franchise system is decent or not than individuals who have actually operated it themselves. The web is turning into a continually rising voice when it comes to service levels experienced by customers on goods and services. A brief search online for the franchise system with 'review' tagged on the end will more often than not give lots of results written by those who have experienced the franchise business first hand, both good and bad. Obtaining a record of current franchisees from a franchise you may be sincerely interested in is a further way of getting hold of some good insight as you travel along the buying process.

2. Backup & Training

Make sure you pay a visit to the head offices of any franchisor you think about. It should give you some helpful insight into their setup and while you're there you could check out any training facilities and documentation they might be able to give you. Again, its a valuable question to ask their existing franchisees, as a good franchisor will give as much support and guidance as needed to offer their franchisees all the tools they need to be a success.

3. Reputation and Brand

Have you heard of the company? And what class of reputation do they possess? This is common sense really but its also worth considering that there are lots of lesser, lesser recognized brands which may well still have decent reptutation and so are still worth considering. Not all franchisors hold the capital to brand themselves strongly on television or billboard however this is not necessarily a basis to discount them if they can demonstrate a track record of industry repute and integrity.

4. Banks View

The franchise departments of the banks are a great place to search out an impartial view of the franchise opportunity you might be considering. It's possible the bank will be drawn in as part of the franchise venture in view of the fact that the greater part of potential franchisees will need to borrow capital to pay for their new franchise business. The banks motivation to lend capital offers a sign of the confidence they carry in any individual franchise. If the franchise is clearly renowned to them and has a respectable track record they will be willing to lend capital as oppose to a franchise that maybe they possess no knowledge of or has a poor track record in their experience. The latter clearly represents more risk to the bank and they will be more wary to provide finance.

5. Associations

The majority of countries have a franchise association of some type that can provide some level of confidence when it comes to looking at buying a franchise opportunity. Their activity is to provide some confidence in the franchise market as the franchise businesses they support generally need to pass a number of basic checks to ensure they possess established systems and a track record of accomplishment. It's important to consult with the franchise association in your country to check if the franchise you are thinking about is a member and if not has the franchise association heard of them and what thoughts they may present.

Finally, your intuition can't be under-estimated! How do you feel when you first meet the franchisorthose behind the franchise. Do they stir up assurance and belief with you? Don't be fooled by promises of fast, high returns... on the contrary a franchisor who seems to have more reasonable style about building a firm long term business is most likely a better choice. The people behind the franchise are the people you will usually be commiting to long term so can you see yourself working with them?

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Article Tags: franchise, franchise opportunities, franchising, starting a new business



Related Forum Posts
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: 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.
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: Service Or Product? - I agree with starting a Service-based Business in the economy. Here is what I think is critical: 1. Researching that your Service business has a market. 2. Marketing the Service with as much leverage as possible. 3. Product-izing the Service (aka Package Expert Knowledge). This will only help elevate you as "the" expert in your niche and make you accessible to people in different price points.


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