Tweet

What to Look For in a New Franchise

Written by: Tom Parsley

Article Overview: Want to buy a franchise opportunity? Great idea! Here is a high-level overview on what to look for.

What to Look For in a New Franchise

Operating History
A long history of success is the #1 thing to look for. If many other franchisees have been successful over the years, your chances are probably pretty good that you will be successful too.

Location, location, location
Investigate the territory rights. Make sure that your site selection is a good one. Don’t settle for a second rate site.

Investigate
Don’t believe everything you hear or read from the franchisor! Investigate. Lean on those experts around you such as an attorney or an accountant. Visit some existing franchisees (choose to visit ones that the franchisor does not recommend, not just the ones that they feed you).

Labor pool
If your franchise is labor intensive (example: restaurant), what is the depth and quality of the available labor pool? Any business needs a strong qualified workforce in order to succeed.

Initial training
Make sure that you and all key employees are adequately prepared. Grand opening support is a must.

Ongoing support
A critical component for success. Make sure that all levels of support are included, and get it in writing upfront! Don’t rely on their statement, “Don’t worry, we will take care of you”.

Marketing programs
Franchise marketing is important. Make sure that any marketing dollars contributed to the franchisor are spent wisely.

Purchasing power
Can the franchisor pass on cost savings to you based on mass purchasing power?

Investment amount
While the upfront cost of the investment can seem expensive, in the long run it is probably not. A more significant expense can be the ongoing royalty and marketing fees.

Exit strategy
If the opportunity does not work, what is your exit strategy? Will the franchisor assist you in re-selling the franchise? Will they help market it for you? Many franchisors will actually provide a section on their web site for franchise re-sales. Beware if there are a lot of re-sales relative to the total number of franchises in existence.

Related Articles
  Franchising with all its Success
  About 60% of all franchise opportunities have less than 50 units.
  Why Use a Franchise Consultant?
  Did you know: NIIT Franchise was present in Malaysia in 1997?
  Master Franchises Explained

Article Tags: Exit strategy, exit strategy, franchise, franchise, franchisees, franchisees, franchisor, franchisor, franchisor, franchisor, franchisor Investigate, history, Investigate, labor pool, Labor pool, Purchasing power, site selection



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!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

When the Going Gets Tough, the Tough Log On

SEO Link Popularity and the Home Business Website

Igniting Your Unstoppable Business Destiny

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.