Top 5 Things To Look For When Researching Franchises

Guest post by: Anne Barr
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Transfers vs. New First Time Franchisees - By Anne Barr

Here are the top five items I tell people to look for in my seminars and in person when consulting with people trying to "find the right" fit in a franchise. 1. Understand your personality and choose a concept that matches your skills and interests as closely as possible. Know your strengths and weaknesses and make sure your family and co-workers would agree with your own assessment of same. When doing your research and talking to existing franchisees, be sure to find out "who is most like you" from background experience and personality and work ethic.

2. Study the Franchise Disclosure Document and then study it again. Get your questions answered by the Franchisor and also consult a Franchise attorney to assist you in reviewing the document and identifying any points you may wish to negotiate with the franchisor. Obviously, the franchisor will likely not reduce the initial franchise fee and/or the royalty fees; however, there may be some verbiage that you want to change in certain parts of the Franchise Agreement that could benefit you when you are ready to sell or transfer the franchise to another party. Certain things can be negotiated with most Franchisors.

3. Research the industry. Stay away from fads and make sure the product or service offered by the franchise is not part of an industry that's changing......what about healthcare changes, for example. What about retail video rental businesses?

4. Visit with as many franchisees as you can. On the phone and personally visit any that are near you (within driving distance). Ask questions about how long it took them to ramp up to cash flow positive position. How soon did they need to add additional employees? Are they happy? Would they do this again? Do they feel they are making the money they thought they would at this point? How did they research and what made them decide on this particular brand?

5. Find out how many new franchisees came on in the last 12 months with this brand. Also find out how many left the system and why. If they left within the last 12 months of the date the FDD was printed, their contact info will be in the FDD. You want to contact anyone who left the system and find out why they left. Often it will be because they didn't ramp up as fast as they anticipated and they ran out of money to keep going; other times it could be a problem between franchisor and franchisee......you need to know.

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Transfers vs. New First Time Franchisees - By Anne Barr

About the Author: Anne Barr

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Anne Barr has over 32 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company.
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