How To Find The Best Franchise FitWednesday, 03 October 2018
Individuals pursuing a franchise opportunity have about 3,000 franchises to choose from, however, by having a plan you’ll be able to narrow your choices down to the best franchise for you. There are numerous resources available that provide advice on how to select and evaluate a franchise. Resources include the Internet, International Franchise Association, the FTC and The American Association of Franchisees and Dealers. However, the best approach is to match your financial resources, business skills, work experience and personal profile to the franchise opportunity that most closely fits these characteristics.
After you objectively answer the following nine questions you’ll be able to find the right franchises to choose from. After you’ve found the two or three that offer the best fit you’ll be able to evaluate the franchises, to find the one that most closely meets your expectations. When you’re ready to evaluate the franchises be sure to utilize professional advice from a franchise attorney and accountant.
- Do you have the personality of a franchisee?
Some people may find operating a franchise restrictive, particularly if they are the creative and entrepreneurial type. An executive that leaves the corporate world with numerous resources at his or her disposal may find operating a franchise a difficult adjustment. Following the operational requirements of a franchise can be a challenge for people who like to be in control and make their own decisions.
- What types of businesses appeal to you?
The franchise you invest in should bear a relation to what you enjoy doing. Most franchises require long- hours so you don’t want to be involved in a business that you don’t like. For example, operating a home care franchise is not the same as operating a children’s service franchise. Be sure you’re comfortable in whatever franchise business you choose. If you’re unsure you can request the franchisor to let you spend a few days in an actual franchise operation.
- Does the franchise require certain skills or experience?
Learn what operations, marketing, and business skills are needed to operate the franchise. Although a franchise is based upon an operating system, some franchises require a knowledge base in a specific industry, such as franchises in the home service sector like a handyman, electrical or plumbing services. Also, some require strong selling skills. Without the proper tools, success can be hard to achieve.
- Do you have the capital to invest in the franchise?
When you consider investing in a franchise remember the Franchise Disclosure Document (FDD) presents an investment range which is an estimate and not a set number. Make sure you have the financial resources to invest in the franchise in the event you need to invest additional capital in the franchise. Without a source of additional capital, you’re risking most of your initial investment.
- Can you devote the time it will take to operate the franchise?
Franchises, like any small or medium businesses, require a commitment in time and attention. Once the franchise is up and running you’ll be responsible for the day to day operation of the business. Expect to work many days and long hours until you have a profitable operation, this can impact a franchisees personal and family life. There can also be stress on the spouse of a franchisee that is left with the total responsibility of the family.
- Do your personal goals complement the franchise?
Be sure your personal goals are in sync with the potential of the franchise. Some franchisees have unrealistic expectations thinking that the franchise is easier to operate than it appears. Some attend a Discovery Day and leave with the impression that the franchise will automatically be successful.
- Are you critical to the success of the franchise?
It’s often said that the lower the franchise investment the more its success depends upon the direct efforts of the franchisee. On the other hand, high investment franchises like McDonalds and Panera Bread have a success rate, brand and operating system that are less reliant upon the individual franchisee. In larger franchise systems the individual efforts of the franchisee are less of a determining factor compared to franchises that are more dependent upon the individual franchisee.
- Be objective when considering your strengths and weaknesses.
The franchise you select should benefit from your strengths and not weaknesses. For example, some franchises require B2B selling which requires making cold calls and contacting people you don’t know. Not everyone is comfortable in that role, while outgoing individuals may feel constrained operating a franchise where they aren't interacting with people.
- Do you have a contingency plan?
Confidence is an admirable trait, but a prospective franchisee should consider the possibility of failing and how they could deal with that possibility. If you’re giving up a successful job that provides a regular salary plus benefits, you should consider this part of your franchise investment. If the franchise failed could you return to that job or find similar employment? It’s the most important question you will have to answer. It’s good to have self-confidence, however, the real world can present unanticipated obstacles to success and it’s important to be prepared for various outcomes.
For individuals that are considering purchasing a franchise, it’s important to make sure that the franchise fits. There is no such thing as one size fits all in the world of franchising.