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.
Choosing a franchise: Step 1
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.
Choosing a franchise: Step 2
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.
Choosing a franchise: Step 3
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.
Choosing a franchise: Step 4
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.
Choosing a franchise: Step 5
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!
Choosing a franchise: Step 6
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.
Choosing a franchise: Step 7
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!