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How to identify your "must have priorities" in a franchise!

Written by: Jim Coen

Article Overview: Franchising presents the opportunity to be successful in your own business, it's also a chance to get stung if you choose unwisely.

How to identify your "must have priorities" in a franchise!

Franchising represents a viable approach to business ownership. For a price, the franchisor teaches its proven business model and methods to the franchisee who shoulders all operating and financial responsibilities of the outlet.

But just as franchising presents the opportunity to be successful in your own business, it's also a chance to get stung if you choose unwisely.

What follows is a list of questions that I have compiled to help you identify your “must have priorities” the answers to these questions that will help you eliminate most of the companies out there. Then, you can concentrate your efforts on the remaining companies that deserve your utmost consideration.

What is the Industry Trend?

Is the franchise in an industry that is doing well currently and is projected to do well in the future despite any economic slowdown or technological advances, or increased internet use, etc. Look at trade publications and identify the future outlook of the industry.

What is the Total Investment Required?

In general, don't expect a franchise that requires a five-figure initial investment to produce a six-figure income. As with most things in life, you get what you pay for. Look for a franchise that fits your financial situation and requirements. Identify the figure you are comfortable with investing and validate that actual total investment by speaking with existing franchisees. Remember to have enough money left to cover your living expenses during the startup prior to profitability.

How experienced is the Management Team?

Does the management team have executives with demonstrated past achievement and experience in operating the business, in the industry or for other franchise companies?

Are you comfortable with the hours and income potential?

How many hours do you need to work to reach the income level you are striving for? Are you willing to sacrifice your time to achieve your goals? Set your work schedule in your mind and look at business models that fit that potential and return the income you need or desire. If you do not want to work every weekend then make sure you are getting involved in a business that allows flexibility on weekends.

What is the Minimum Number of Employees?

How many employees are you willing or able manage, are you willing to manage minimum wage employees, managing dozens of minimum-wage employees who are constantly quitting or simply not showing up for work may not be something you want to handle. Others accept it as part of doing business.

Investigate whether the existing franchisees are opening additional units?

It doesn’t matter how many units they initially purchased what is important is if they living up to the development schedule, and if not why. Many franchisees have great intentions to build X number of units, but then reality sets in, find out what the realities are.

Watch out for the real estate Lease?

For most retail franchises, the triple net lease of the location is the biggest financial commitment, larger than the total franchise investment.

Are you comfortable with the Image & Lifestyle?

How does flipping burgers, scooping ice cream or cleaning restrooms fit the image of what you want to do for a living? Investing in a franchise will be the most important psychological and financial decision you ever make. Does the typical working day of the franchise you are considering fit your personal image and your desired lifestyle?

This list of “must have priorities” is a very good way for you to filter franchise opportunities and determine which ones warrant your consideration.
Investigating a franchise takes some time but I have seen over and over again that if you choose a franchise wisely, success is almost assured.

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Re: Which franchise would you buy? - The franchise to buy, the one that will succeed is the one that is either underrepresented or not represented in the community. Look at your community, identify what service is missing. That is the franchise to pursue. Too many people buy a franchise based on their "heart". A franchise is a "widget". I have found that once people began to investigate a franchise they had never thought of, but find their is a need; the entrepreneurial "gene" kicks in and they get excited. They began seeing the possibilities of success, and as they uncover the nuances of the franchise, they become more interested. It is the uninformed that are uninspired.
Loan prequalification & find the right franchise invest. - You need to identify how much you are eligible to borrow and that will help determine the right franchise and investment size you should be looking into. With a 100K, you may qualify up to 200K depending upon what your net worth and credit score are. You can use 50K of your money to invest (covering your inital franchise fee & loan down payment) and 50K as an asset (placed in an interest earning CD) for collateral at the bank where your loan will be (so the lender can lien the CD). Our company can Under-collateralize a loan and count/credit your franchise fee (and other out of pocket expenses) toward your loan down payment. We also have free franchise consulting resources available to help you find the right franchise investment (that you qualify for). Also, once you are pre-qualified by us (a free service), you will receive a free letter stating your loan eligibility and that often helps with a franchisor (where their requirements may be different) . Once a franchisor knows you are a good candidate for financing and you have a letter stating that, they tend to overlook their own requirements. Contact us, we may be able to help you.
Hello I am a franchise expert - Hello, I recruit franchise owners for successful franchise concepts based in the USA. Many of my franchises are looking to expand north to Canada in all major centers. I enjoy networking and answering questions about franchising. If anyone is interested in the franchise world or looking to buy a franchise then contact me. I have a wealth of information and like to help. Thanks for your time. Michael Somer
Re: Franchising Brokers vs Franchising Consultants - Franchise consultants are free and work with you without any obligation. they do not work for any one franchise but do get a percentage of the franchise fee when a franchisee that was registered with the franchise came from the consultant and the franchisee signs. They will try to match up your interests and skills to franchise businesses that are right for you. They can explain franchise guidelines and help you in any way they can. Franchise brokers usually get paid by the client and/ or franchise (generally get some type of commission). Additionally, they can get points or referral fee off the deal if they refer you to a lending resource too after they sell you on a franchise. Typcally they will try to sell a prospective franchisee on a larger deal so they get a larger commission.
What is the Best Franchise? - As a Franchise Consultant I get asked this question on a daily basis. I work with clients to help them find the right franchise and through those conversations they almost always as me: "What is the Best Franchise?". There is no single answer for this question as the answer truly depends on the criteria you set as a perspective franchise owner. Meaning, maybe you want a retail location with 5 employees or a home based franchise with zero employees. Either way, the word "best" becomes relative to what is important to you. I realized quite some time ago that I could never "sell" a franchise to anyone. The only way someone will buy a franchise is if it makes sense for them & their family. Performing the proper due diligence is key to finding the best franchise for you.


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