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What to do before Selecting a Franchise System

Written by: Tom Parsley

Article Overview: Many people dream of being an entrepreneur. By purchasing a franchise, you often can sell goods and services that have instant name recognition, and you can obtain training and ongoing support to help you succeed. But be cautious. Like any investment, purchasing a franchise is not a guarantee of success.Before investing in a particular franchise system, carefully consider how much money you have to invest, your abilities, and your goals.

What to do before Selecting a Franchise System

Many people dream of being an entrepreneur. By purchasing a franchise, you often can sell goods and services that have instant name recognition, and you can obtain training and ongoing support to help you succeed. But be cautious. Like any investment, purchasing a franchise is not a guarantee of success.

Before investing in a particular franchise system, carefully consider how much money you have to invest, your abilities, and your goals. The following checklist may help you make your decision.

Your Investment
• How much money do you have to invest?
• How much money can you afford to lose?
• Will you purchase the franchise by yourself or with partners?
• Will you need financing and, if so, where can you obtain it?
• Do you have a favorable credit rating?
• Do you have savings or additional income to live on while starting your franchise?

Your Abilities
• Does the franchise require technical experience or relevant education, such as auto repair, home and office decorating, or tax preparation?
• What skills do you have? Do you have computer, bookkeeping, or other technical skills?
• What specialized knowledge or talents can you bring to a business?
• Have you ever owned or managed a business?

Your Goals
• What are your goals?
• Do you require a specific level of annual income?
• Are you interested in pursuing a particular field?
• Are you interested in retail sales or performing a service?
• How many hours are you willing to work?
• Do you want to operate the business yourself or hire a manager?
• Will franchise ownership be your primary source of income or will it supplement your current income?
• Would you be happy operating the business for the next 20 years?
• Would you like to own several outlets or only one?

Summary
By knowing your situation before you begin shopping for a franchise opportunity, you are better prepared to evaluate whether or not a franchise is right for you. Look for more articles in this series to learn more about how to successfully buy a franchise.

Related Articles
  Before Selecting a Franchise System
  10 Tips for Selecting the Best Franchise
  5 Tips to Select the Right Franchise Opportunity
  Franchisee checklist - assessing the franchisor
  Are You Ready to Start a Franchise?

Article Tags: abilities, additional income, credit rating, franchise opportunity, franchise system, goods and services, money, money, money, name recognition, tax preparation, technical skills, the franchise



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.
Book: The System - [quote:3e8ncw28]What was the name of that book -- the high finance murder mystery?[/quote:3e8ncw28] Sorry for the delay in answering this question. The book is: The System: A Story of Intrigue and Market Domination Terry Waghorn Perseus Piblishing 2002 Jacket description: In a world where competitive advantage is temporary at best - and illusory at worst - there is nothing more important to the business enterprise than creating a robust strategy and executing it with Steve. In The System, Terry WAghorn illustrates this universal theme through an action-packed adventure.


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