Franchising is a wonderful way to go into business for yourself. If you’ve taken a good look in the mirror and decided that you’re a good fit for franchising, you’re probably wondering: what’s your next move? How should you go about finding the franchise that’s right for you?
That’s where we can step in. At FranChoice, we’ve helped thousands of people find the right franchise and realize their dreams. If you’d like to get an idea of how the process works, take a look at these 7 steps we recommend. They can lead you on your way to finding your perfect fit in franchising.
Step 1 – Aligning Your Business Judgment and Investment Goals
Before you even start evaluating franchises, you’ll need to take a good look at yourself. What are your skills, experience, and interests? What are your strengths and weaknesses? How much money can you invest and how much would you like to make?
Think about past jobs you’ve held. What did you like most and least about each of them?
What is your work style? Are you comfortable managing others or would you prefer to work alone? What hours are you willing to work while the business ramps up and what lifestyle expectations do you have after the business is established?
Where do you want to work? Are you willing to relocate?
How do you feel about selling and the sales process?
Knowing what you have to offer and what specifically you’re looking for will help you create a strategy and guide your research.
Step 2 – Keeping an Open Mind When Choosing a Franchise
Keep an open mind. This is important regardless of whether you’re working with a FranChoice consultant or doing your own franchise research.
If you approach the process narrowly from the start, spending days or even weeks at the beginning researching a single type of business, you may waste a lot of time. Your hours of research could be for naught if you eventually find out that you lack the necessary capital or your desired territory is unavailable. In limiting yourself to looking at a narrow sliver of businesses, you can risk missing out on a concept that fits you perfectly.
With thousands of franchise companies out there to choose from, you’ll do yourself a favor if you keep an open mind.
Step 3 – Researching the Franchise System and Business Model
Let’s say you’ve found an assortment of franchises that looks promising. What next?
Contact the franchisors to request information about their concepts. You will probably then receive a call from someone in the franchise development department. They’ll gauge your level of interest and tell you whether your desired territory is available. Make sure you thoroughly view their website information and any materials they send your way.
Take notes on your impressions. Are their materials professional and up-to-date? Are their corporate staff friendly and knowledgeable? Do they do a good job of answering your questions and addressing your concerns? If you’re displeased with the type of response you receive at this stage, it could be a red flag. It’s possible you’d also be unhappy with the degree of support they provide their franchisees.
Step 4 – Understanding the Franchise Disclosure Document (FDD)
Review the company’s Franchise Disclosure Document (FDD), which every franchise in the United States must provide. The FDD will describe the history of the company, the training and marketing programs, and what costs, royalties, and fees are required. Some franchisors also provide earnings claims in the FDD to help you estimate potential income.
Your review and understanding of the FDD is a very significant part of the research process. The FDD is full of information about the franchise and it clearly explains the responsibilities you would have as a franchisee as well as those of the franchisor.
Careful review of FDDs will help you weed out franchises that just don’t measure up. If you find a franchise is facing multiple lawsuits brought by franchisees, or closing more units than it’s opening, it’s a good idea to keep your distance.
Step 5 – Speaking with Current and Former Franchisees
This step is extremely important. To figure out whether you’d be happy owning a particular franchise, you need to speak directly with its current franchisees.
Franchisees are a valuable source of information. They’ll tell you what really happens on a day-to-day basis. You can ask their likes and dislikes about the business. Are they satisfied with the level of support they receive from the corporate office? Ask them about the typical level of earnings per unit in the system.
Gathering a variety of opinions will provide a clear picture of the franchise and how well you’d fit into the organization. Don’t skip this step!
Step 6 – Evaluating Franchise Opportunities Through Discovery Days
Let’s review what you’ve done so far:
Made a list of your strengths, experiences, and preferences
Found appealing companies while keeping an open mind to all possibilities
Requested information from the corporate office of each franchise
Reviewed the UFOC of each franchise
Talked with current franchisees
Hopefully you’ve now identified one or more companies that will meet your needs. How should you narrow the field?
It’s now time to participate in a “Discovery Day,” an on-site meeting with a franchisor. You’ll meet the top people in the home office and perhaps visit a local franchisee. You’ll have another chance to ask questions and might to get some hands-on experience with the business.
Discovery Days are very interesting and exciting. They’ll give you an even better understanding of the franchise. But don’t forget that this is a two-way street. They’ll be evaluating you as just as thoroughly as you’re evaluating their business.
Step 7 – Final Decision
The last step, of course, is to make your final decision. It’s normal to experience anxiety, excitement, and fear, as you would with many major decisions. But if you’ve done your homework and followed these steps, you should be very comfortable with your process and your decision. Congratulations—you’re ready to be a franchisee!
FAQ About Choosing a Franchise
How can I choose the right franchise that aligns with my background and goals?
When choosing a franchise, it’s essential to begin by evaluating your own business judgment, skills, lifestyle preferences, and investment capacity. Think about your past job roles and what kind of business model best matches your strengths. A successful franchise often leverages a proven business model, strong brand recognition, and solid support staff. Understanding your long-term goals helps ensure you’re selecting the right franchise that fits your personal and financial vision.
What should I look for in a franchise disclosure document (FDD) before signing a franchise agreement?
The franchise disclosure document is a critical part of the due diligence process when considering a particular franchise. It outlines details about the franchise system, franchise fees, ongoing costs, initial investment, royalty fees, performance standards, and franchise contracts. Some franchisors provide earnings claims and financial statements, which help evaluate whether the opportunity aligns with your financial goals. Review this document carefully to understand sales restrictions, design or appearance standards, and any periodic renovations required.
How important is it to speak with current and former franchisees during the research process?
Talking with current and former franchisees is one of the most important factors in understanding the real-world experience of franchise ownership. These conversations give a better sense of daily operations, ongoing training, marketing support, advertising fund contributions, and whether the franchisor provides adequate help. Asking how many franchisees are profitable and satisfied offers crucial insight into the successful track record of a particular franchise system.
What kind of support and training can I expect when buying a franchise?
Many franchisors offer comprehensive ongoing training, business coaches, and help with marketing, grand opening planning, and repeat business strategies. You’ll often receive training on the system developed by the franchisor, including everything from customer service to operating expenses management. Some franchise opportunities also help with sourcing vendors to buy equipment, manage tax preparation, or plan national advertising campaigns. These resources can make the difference between a struggling unit and a successful franchise.
What are the typical costs associated with investing in a franchise?
The initial investment in a franchised business can vary widely depending on the industry and location. You’ll need to budget for the franchise fee, royalty fees, ongoing costs, and possibly periodic renovations or required upgrades to meet appearance standards. Some franchise contracts also require contributions to an advertising fund. It’s essential to factor in all costs—buying a franchise often involves thousands of dollars—and to develop a comprehensive business plan to stay financially sound over the long term.