Opinions expressed by Entrepreneur contributors are their very own.
The next excerpt is from Mark Siebert‘s guide The Franchisee Handbook: Everything You Need to Know About Buying a Franchise. Purchase it now from Amazon | Barnes & Noble | Apple Books | IndieBound
Whereas the web is a superb device for preliminary research, it ought to function a basis slightly than the only supply of data. Combining on-line analysis with real-world exploration — resembling participating with franchisors, brokers, opponents, and commerce occasions — will present a extra complete understanding of a franchise alternative.
Past digital sources, visiting franchise places (each native and in distant markets) permits potential franchisees to guage operational high quality, consistency, and buyer expertise. Observing day-to-day operations and evaluating opponents can reveal potential challenges or alternatives not evident on-line or in promotional supplies.
The franchisor
Your first supply of data on a franchise firm would be the franchise company itself. It would typically have the ability to offer you a wealth of data, together with the franchise disclosure doc (FDD), franchise brochures or different promotional supplies, hyperlinks to franchisee testimonials, and maybe info on the business usually.
You may anticipate the franchise salespeople will try and qualify you on the primary name. Most will ask you to fill out a confidential info request kind (CIRF) and focus on their course of for mutual analysis. Typical qualifying questions will contain your capitalization, desired geographical area, and timetable for deciding. Assuming you are critical about investing in a franchise, you ought to be frank along with your solutions.
The salesperson will then usually suggest a collection of steps you will each undergo to study extra about one another. A few of the steps might embrace a evaluation name to go over the FDD, market visits, calls to franchisees, and investigating the marketplace for your providers. Make the most of this useful resource as quickly as you are right down to your quick record.
Associated: 3 Reasons Buying a Franchise Might Be Better Than Starting Your Own Business
Franchise brokers
One other useful resource that may assist information you thru the method of shopping for a franchise is a franchise broker. Brokers, who usually name themselves “franchise consultants,” is usually a worthwhile device in serving to you assess your choices.
Not like a franchise salesperson, a dealer is not restricted to a single franchise idea and will symbolize 100 or extra franchisors. In the most effective networks, the dealer is skilled to assist a potential franchisee slim their selections to a handful of opportunities for which they’re well-suited.
Usually, you will not pay a payment to the franchise broker. They supply this service in trade for successful payment (basically a fee) paid by the franchisor — sometimes within the vary of $20,000 or extra — if an introduction they make ends in a sale.
Finally, brokers are an incredible useful resource that may present real worth, however they don’t seem to be the fully unbiased purchaser’s advocates some would have you ever imagine. So whereas brokers are a useful resource it is best to actually think about, in the end it is best to ensure they’ve steered you in the appropriate route.
Associated: Greg Flynn Owns 1,245 Restaurants and Makes $2 Billion A Year. Here’s How He Did It.
Commerce and Trade Reveals
One other excellent place to get info on franchises you may need to think about is at franchise trade shows and, in the event you’re wanting in a particular area, business exhibits. Franchise exhibits specifically will provide you with a possibility to talk with a number of hundred franchisors from quite a lot of industries in simply a few days.
These exhibits produce other benefits as nicely. Usually talking, they provide seminars on all elements of franchising — supplying you with an opportunity to study before you purchase. These seminars function subjects like business tendencies, understanding contract provisions, veterans’ franchise applications, financing, and general success as a franchisee and are sometimes price attending.
Take into account that these exhibits might not present a consultant pattern of the franchise marketplace. The exhibitors are likely to skew barely towards youthful franchises and ones with decrease funding ranges.
Associated: These Women-Founded Franchises Surpassed a Major Milestone — Against the Odds. Here’s How They Did It.
Trade associations
The website of the International Franchise Association comprises a wealth of data on franchising. Along with permitting you to go looking choose franchisors, it gives info on business suppliers in areas resembling finance, insurance coverage, veterans’ applications, minority applications, and the franchise shopping for course of.
Associated: Franchise vs. Independent Business? 12 Experts Weigh the Options
Opponents
One other factor you ought to be doing is visiting competing companies — each franchises and independents — in your neighborhood. Drive round for a day or two, device round on the web and begin taking notes. Who’re the competitors within the companies you’re contemplating? How lengthy have they been round? What are their aggressive strengths and weaknesses? What’s their pricing construction? What sort of places have they got? Write all of it down — it’s going to present the grist for some good questions for potential franchisors in a while.
Additionally, go to any native institutions which might be in the identical common section you are contemplating throughout off-peak hours. Speak to the employees, who are sometimes surprisingly keen to share details about how the enterprise is doing if approached appropriately. Get a really feel for a way these companies compete within the market.
Should you’re all in favour of a enterprise that does not have a bodily presence, spend your “drive time” on the web taking a look at their web site. Be aware their costs and the way they place the supply. Attempt to get a feel for a way large their market is. If it is a service-based enterprise, name them up and ask for a quote.
Discover out what benefits they’ve and the way they will compete with you. Ask them the identical questions you requested your focused franchisor. What assist providers can they depend on? What does their payment construction appear to be? What do they consider the market and the franchisor? Maybe they will inform you one thing in regards to the firm you did not already know.
Whilst you’re at it, you might also need to go to places to your goal franchisor in some distant markets. See whether or not they’re all run in the identical method. Do they provide the identical services, and at comparable costs? Are their places laid out the identical? Are all of them clear and well-run? In case your first response is, “I can do a greater job than they do,” which means the franchisor will not be doing a great job of high quality management — and people substandard franchisees will in the end be representing you, as they will be flying the identical flag and telling their clients what they will anticipate once they go to your location.
Additionally, attempt to get a really feel for what the proprietor or supervisor of the enterprise does on a day-to-day foundation. What might seem glamorous when studying about it on the web might become extra mundane when you’re doing the job day in and time out.