How to find the franchise that’s perfect…for you.
Buying a franchise is a complicated decision. The process of finding the franchise concept that is perfect for you can be overwhelming as there are franchise options that cover nearly every possible business idea from doing taxes to education to brewing the perfect cup of coffee. Potential buyers are typically looking for the support and tried and true guidance on how to be successful which is much harder to find than just finding a famous brand and writing a check. The decision to make this investment requires an investigation that would make Sherlock Holmes proud and the investigation alone requires an investment of both time and money. To make it in the world of business ownership, buyers need to find something to be passionate about; find something that you’re going to enjoy doing that can bring you not only financial but personal success and satisfaction. Getting into a franchise is a lifestyle decision, each concept provides different lifestyles and finding the perfect fit is key to happiness and longevity as a business owner. But how do you start narrowing down the overwhelming number of opportunities to find the concept that is perfect for you? There are many approaches and you should work through a due diligence process that is meaningful for you. This process is a bit like dating and it takes several dates to learn enough about your potential partner to know if this is the person you want to commit to. Below are some helpful tips to consider when weighing the options of different concepts to find the perfect match.
The search starts from within. The ancient Greek’s talked of the importance of “knowing thyself” and this is the best place to start when looking to go into business for yourself. This process can be done many ways but understanding your strengths and weaknesses is paramount in choosing the right franchise. Ask yourself, what your business strengths and what are your potential weaknesses or opportunities for growth? What types of things do you really enjoy? Also, what are things you do not enjoy doing? For example, are you a front of house people person or a back of house operations person? Do you like to be mobile and flexible or are you more comfortable going to the
same place every day? Do you like managing a team or are you looking for something to do on your own, maybe out of your home? What kind of lifestyle do you want this business to support in reference to both time and money? How much money do you need to earn and how much do you want to earn? Do you prefer a set schedule or variable hours with more control? During your due diligence, make sure that you understand exactly what it's like to be a franchisee for each concept and make sure it’s aligned with your personality and goals.
Doing your homework verses “Analysis Paralysis”. The key to finding the right fit lies within the details. There are many approaches to narrow the choices down but the key is just that, pairing the choices down to a manageable number so that you can do your homework. It’s best to start by narrowing your choices down to a few industries you are most interested in. Comparing like concepts or concepts within a given industry is a great way to set some benchmarks and compare important things like response time, support to the franchisees, products or services. We’ll discuss later in this article different ways to find the franchises you’d like to compare and some tools to help make an educated decision. As you begin your search, any reputable company will be happy to send you information at no cost and the most successful companies have a thorough process of mutual investigation so that you can make an educated decision about each other. While you are following their education processes, do your own detective work. Search online to find all of the information you can about the company you're considering including reviews, advertisements, ratings, awards, social media, websites, etc. .
Gut is something…but not everything. There is something powerful about following your instincts, but failure to do a thorough investigation to back your gut is the single biggest error in that prospective franchise owners can make. Instincts give you the emotional, “heart” decision which is a big part of the process, the “head” part of the decision backs your instincts and allows you to fully validate the decision.
Get counsel from outside counsel. Find an attorney but not just any attorney, a franchise attorney. Going to a general attorney for franchise advice is kind of like going to a chiropractor for a toothache…close but not quite. Most companies will not negotiate or change their agreements so you are looking for peace of mind as much as anything else. Outside advice from attorneys, accountants, or consultant who specializes in franchise matters can provide opinions without emotional investment. They can play devil's advocate for you in this process, so that you're not making a decision based solely on emotion. Though this can be a helpful and important step in your investigation, take comfort that you have done your research and counsel is just that, an outside opinion.
Show me the money. There is a wide range of investment levels surrounding franchises. Franchise investments can range from a few thousand to hundreds of thousands of dollars or even millions based on a many factors making crunching numbers critical. Look at the investments of each franchise and even ranges within a concept due to different levels of entry or business models to see what is attainable for you. Be sure to look at not only the upfront investment including the franchise fee and any build-out costs if applicable but also ongoing costs like monthly franchise fees, advertising contributions and royalties. This is a great point in your due diligence to involve your accountant to work on some best estimates for the future of your business but also understand the variables that will contribute to the results. Having the capital to remain safe is one of the most important factors in starting a business. Be sure that your projections include enough money to support you and your family for the period of time necessary until the business becomes profitable or that you have enough cash saved to keep things afloat while the business is ramping up. During your exploration, it’s best to look into all of your options to fund the business. Weighing using your savings verses other people’s money is a big decision and like everything else, takes information to make an educated decision. Look at all of your funding options and be sure to keep an open mind. There are many ways to fund a business through banks or credit unions, 401K roll-overs, unsecured lines, loans against your investment portfolio, equity lines, equipment leasing, etc.; do your homework and make the decision that best fits your financial goals.
Validation…the proof is in the cup. This is often the most important part of the investigation process and will provide a real world view of the concept from someone who has already made the investment you are thinking about making. In the Franchise Disclosure Document, the franchisor must provide names and contact information for other franchisees. Making calls to some of these individuals can give you invaluable information about the actual experience of working with the company, product or service response, support from the headquarters, working with other franchisees, etc. Some franchisors will encourage you to sit on panel discussions with current franchisees which can yield valuable information but be sure to call individual franchisees and ask questions that pertain to your process in hopes of having an open, honest conversation. Beware of any franchise concept that shies away from you having one on one conversations with their franchisees. Be sure to ask questions about the information you need to make an educated decision. Some questions typical prospective franchisees ask include but are not limited to: Does the franchisor deliver on their promises? Are they providing you with anticipated support? Did your investment fall in within the range that is listed in the disclosure document? Are you happy with your current returns? Do you feel good about the decision that you made? How is the customer response to your product or service? Would you do this again? Specific questions are also appropriate about the business so that you get an idea of the day-to-day life. What do you do on a day-to-day basis? Tell me what a typical day is like. What skills are most helpful to be successful in this business? Most franchisees in happy, successful systems are willing to take the time to answer your questions and are willing to share the information. In the end, you should feel comfortable that this is a company that puts you in a position to be in business for yourself, not by yourself.
Business is done face-to-face. This is not a suggestion that you buy a franchise on a handshake but it is important to meet the team you will be dealing with and the management team leading the charge. Many concepts host Discovery Days for just this reason. This is an opportunity to see everything in person, meet the team that will be supporting you, sample product if applicable, and meet the top management that is affecting the direction of the concept. The look and culture of the office and the attitudes of the people working there can speak volumes about the company itself and can only be seen in person. As we discussed earlier, you are considering marrying these people; you have to look them in the eye and like what you see.
A game plan combined with the flexibility to adapt is the recipe for success. Having a plan of attack is paramount to making a good decision and having success in business. Plans need to, however, incorporate an element of flexibility to stay open to change and adapt to variables that may come your way. In writing a plan there are lots of resources from industry experts to websites that provide templates, to conversations with the franchises you are evaluating. You should include such elements as an overview of the company and business models, day-to-day tasks and management, marketing, financial projections, financing, and the overall vision and execution of the business including players and timelines.
Okay, I’m ready to evaluate…how do I find the companies? Fishing for the right company is overwhelming. There are many fish and almost as many ponds. A great place to start the search is online. Internet searches come up with thousands of websites that are designed just for this purpose. Exploring websites like www.franchise.com, www.franchising.com, www.franchisegator.com, www.franchisesolutions.com, and the many more like these is a great way to cast a wide net and see what’s out there. Not all sites are created equal but most will let you search and filter by fields like industry, investment level, etc. and provide a brief introduction to many concepts to start focusing on what catches your attention. Once you narrow down your search, visit the company’s websites to get a better look at their offerings, culture, and information about the education process. Most successful franchises have sites dedicated to educating potential franchise prospects so you can peruse at your leisure before beginning conversations. If you are having trouble getting started, there are many franchise consulting companies out there that act as match-makers for franchisors and potential franchisees. Like websites, not all groups or consultants are created equal but most will have access to information about many concepts and spend time getting to know you and your interest and then present options that may meet your needs. These consultants work at no cost to you and can provide excellent feedback on concepts including how mature they are in franchising, what they offer at a high level, and connections to begin the education process.
The search for the perfect franchise can be overwhelming and the right answer can seem elusive. With patience, commitment, and an open mind, anyone can find the perfect fit. Like all relationships, getting to know each other is key; spend the time, ask as many questions as you need to so that you feel comfortable and make a decision based on both the head and the heart. Happy searching!