If you want to own a successful franchise it is vital that you choose the right opportunity for your circumstances and interests. To do this you need to conduct thorough research into the industry and brand before signing a legally binding franchise agreement.
Here are five tips to help ensure that your research is successful.
1/ Investigate the franchise industry
Franchising is just one option of becoming self-employed and although it has many benefits, for example a better success rate than most other start-up options, it is not suited to everybody. To find out about the pros and cons of franchising you should investigate the industry fully. A good way to start is to look at franchise magazines and websites, and attend franchise exhibitions. These will not only provide you with information about opportunities available, but will often provide information, advice and guidance about the franchise industry in general.
Another good source of information is speaking to people you know who are franchise owners. Even if they do not own a franchise in the sector that you are interested in, they will be able to provide you with information about what it is like owning a franchised business.
2/ Is the business sector suitable?
After investigating the franchise industry, you have decided that franchising is the right option for you. Great, now you need to start looking for a suitable franchise opportunity. It is now that you need to think about the sort of business you want to own. To do this you need to ask yourself questions such as do you want to be based in an office or be out and about most of the time?
You also need to decide what sector you want your business to be in and whether it is suited to your area. Look around your local shopping areas and see if there are any similar businesses, and if not, why? Remember not all businesses will work in all areas, for example a shop selling mountain climbing equipment would probably do well in the Peak District but would not be successful in Norfolk. As someone who lives in the area and knows the locals, you are in the best position to known what would work and what wouldn’t.
You could also conduct market research to see if residents are favourable to the business concept. The best way to do this is to go out into your area and ask potential customers for their feedback.
3/ Meet the franchisor
Now that you have decided on the type of business you want and in what sector you need to narrow you search down to specific brands. In the past franchise owners have first found out about their franchises in a variety of places including franchise magazines, word of mouth, franchise exhibitions, and even adverts in local and national newspapers.
It is important that you look into each franchise that you are seriously considering in detail – look at the company website, branding, visit their stores.
As part of the franchise process it is normal for potential franchise owners to meet with the franchisor. These meetings enable you to make sure you are able to work with them and the franchisor will decide if you are right for their network. These meetings are also a perfect opportunity to get information that you would not get otherwise; don’t be afraid to ask difficult and probing questions.
When meeting the franchisor arrange to hold it at their head office, as this will enable you to see how professional the company’s set-up is. If the franchisor tries to arrange the meeting at another location you should find out their reasons why and arrange to visit their head office at a later date.
4/ Speak to existing franchise owners
Once you have created a list of one or two brands that you are interested in it is vital that you speak to their existing franchise owners. You do not need to contact every single one in the network, however you should make the time to speak to a number of franchise owners. This will enable you to get a better understanding of the business from the franchise owners view point and will provide information on what the day-to-day running of the business is like, how long it takes to start making a profit, how much support franchise owners receive from the franchisor and what the working hours are like.
The franchisor should give you contact information about all their franchise owners to allow you the opportunity to decide which ones you speak to. If the franchisor tries to give you a limited list or direct you to certain franchise owners alarm bells should start to ring.
If possible you should also speak to former franchise owners and find out their reasons for leaving and how easy it was to resell the franchise.
5/ Check out the bad press
Even franchise giants like McDonald’s get bad press from time to time, so you should not be discourage as soon as you read something negative about the franchise. Use common sense to judge the severity of the comments, but if anything is giving you concern contact the franchisor and find out what they have done to improve/rectify the situation. If there is a constant stream of bad press about the franchise (especially if franchise owners are making negative comments) you need to re-think whether this is the right opportunity for you.
Remember that it is called a franchise investment fee because it is just that – you are investing in a business that should bring you financial and personal reward. Like all investments it is down to you to ensure that you are making the right decision, so thoroughly researching all the options and opportunities is vital to a successful investment.