Steps to Finding the Right Franchise BusinessPosted: April 4, 2013 | |
Are you ready to dive into the world of franchise ownership, but aren’t sure exactly where to start? You aren’t alone! The franchise industry is large, and one can easily get lost if they are not sure what they’re looking for. Using my experience from my own TAB franchise ownership, this week I would like to share with you the steps involved in finding the right franchise business for you.
- Decide on what industry you’re interested in. I mentioned in my blog last week that there is so much more to the franchise industry than fast food restaurants. Do not limit yourself to looking in just one area. Explore all the industries, from food and retail, to finance and professional services. Do not be afraid of the unknown – look at all options as opportunities to learn something new. Most importantly, determine what you’re passionate about to guide your search.
- Select at least three franchises in your industry of choice. Being able to compare the franchises will prove extremely helpful when deciding which is the best fit for you.
- Contact each franchisor and discover who they really are. Inquire about the process involved in purchasing a franchise. Every good franchisor will have a clearly outlined process. Having this conversation with the franchisor is crucial before continuing to narrow down your search.
Note: Be wary of franchisors that look for money upfront or require you to sign any commitment at this stage. These are red flags that should bring their credibility into question. Their process should allow you to determine how fast or slow you want to proceed.
- Review the franchise disclosure document. It should provide a complete picture of the franchisor from legal structure to financials as well as detail franchisee commitments and franchisor responsibilities. You may want to have an experienced franchise lawyer review this with you.
- The fun begins when you are ready to visit head office and meet the people you’ll be working with. You should meet all the key individuals you will be working with and learn about their training program, marketing resources and other support systems they have in place.
- Before making your final decision, you should have access to all existing and past franchisees so you can ask them about their experiences with their franchise and their relationship with the franchisor. Make sure you have all the answers you need before signing any agreements with, or paying any money to the franchisor.
- Once you’ve made your decision to move forward with purchasing the franchise, communicate your interest to the franchisor and ask for the franchise contract. Be sure to have the contract reviewed by your lawyer.
- Your initial payment usually includes the licensing fee, marketing support, and training. These three components are necessary for the success of your franchise.
Keep in mind that processes for small and large franchises may differ. Size changes a number of variables, so keep that in mind when comparing franchisors.
I always enjoy hearing from you. Please share your franchise questions or stories in the comments below.