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3 steps to finding a franchise that’s right for you

By FranChoice Blog | Aug 21, 2019

finding a franchise

If you’ve looked into the process of finding a franchise to invest in, you probably realize that it can be overwhelming. In the U.S. there are thousands and thousands of franchise businesses operating in at least 75 different industries. If you’ve decided that it’s time to stop lining someone else’s pocket and start making money for yourself, you have a lot of work ahead of you. The last thing you want to do is spend hours researching a particular business, only to find out that some aspect is a deal-breaker for you.

Of course, what’s desirable about any franchise opportunity differs from person to person. For example, you may want to work regular business hours. If so, it would make sense to look into companies that sell to other businesses and avoid retail and food franchises that remain open during evenings and weekends. Someone else may desire a lot of customer interaction, and for that person, retail and food would be exactly the types of business to pursue.

That’s why, before you even begin researching businesses, you need to do a thorough self-assessment and determine exactly what you’re looking for. Here are 3 steps to get you started in finding a franchise.

Step 1: What’s on Your List?

Start by writing out your “want list.” What are you looking for in business ownership? What hours would you like to work? Are there particular aspects of doing business that you enjoy (e.g., marketing, selling, networking, managing employees)? What don’t you enjoy? List your strengths and weaknesses, the amount of money you’d like to earn, and the amount you have available to invest in the business. This self-assessment will help you narrow your list of franchises.

Next, take a look at the websites of franchises that interest you and compare them to your “want list.” This should help you quickly eliminate a number of franchises. Does the company have expensive start-up costs that exceed the amount of money you have access to? Does it require you to spend your time on aspects of the business you prefer to avoid? Cross them off your list.

Step 2: the Franchise Disclosure Document

Now that you have a shorter list of franchises to explore, you can ask each for their Franchise Disclosure Document (FDD). Review the following to further narrow your list:

Territory limitations. Is territory available in your area?

Litigation. Review this section of the FDD to understand the relationship between the franchisor and its franchisees. If a number of franchisees have sued or been sued by the franchisor, that could be a red flag.

Failure rates. If the franchisor’s track record doesn’t look strong enough to you, move on.

Be sure you understand the information in this important document before making a decision to go forward with any company.

Step 3: Speaking to Franchisees

By this time you’ve probably narrowed your list to a small number of companies. However, you probably also have many questions remaining. The best way to get answers is to speak with franchisees in the system. You’ll find their contact information in the FDD. Create a list of questions and get on the phone with them. What’s a typical day like? Were there any unexpected start-up costs? How well did the franchisor’s training prepare them to run the business? If you get consistent answers from franchisees, you should get a good sense of what it would be like to be an owner in that system.

It should take 4-6 weeks to go through these steps. To streamline the legwork involved in finding a franchise and get expert advice throughout the process, speak with a FranChoice consultant. There are no costs to you and no strings attached. Why not make that call?

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Life after layoff: franchising as a second act

By FranChoice Blog | Aug 14, 2019

life after layoff

Are you facing life after layoff and looking for your next move? Over the past two decades, the hiring of ex-corporate executives as new franchisees has skyrocketed. As corporate layoffs become commonplace, franchisors have found a treasure trove of potential franchisees with extensive management experience. Many ex-executives also have significant capital available due to severance packages they’ve received or from their years of earning high salaries.

What to expect

For an ex-executive, there are aspects of being a franchisee you’ll need to take note of when planning your life after layoff. For one, in a franchise operation, you won’t necessarily have a large budget or deep bench of personnel on site to support you. You’ll need to make decisions much more rapidly and almost always without having complete information at your disposal. The risks of making a mistake may be much smaller in a financial sense, but they’re also far more personal, since it will be your own treasure at stake.

It’s essential to do your due diligence when investigating a franchise opportunity and understand clearly what your role will be as a franchisee in any particular system. Failure to do so could put your future as a content and successful franchisee at risk.

Standard franchise businesses

Your first decision in transitioning from corporate employee to franchisee will be whether to pursue a “standard” vs. “executive” franchise business. Both can be great, but they’re quite different in terms of the role you’ll play.

In a standard franchise business, you’ll be very involved in the daily operation of the unit. You can expect to spend a significant amount of time working at the physical location of the business and trying to increase business through marketing or sales. You’ll play a hands-on role. And you’ll probably work harder than you have in quite some time, especially during the first few years.

If you’re a former executive who’s tired of the bureaucracy and decision levels involved in a large company, a standard franchise can be quite exciting and rewarding. You’ll be able to control and drive the business and make decisions on every level. You’ll interact directly with your customers. The potential downside is that in addition to being the CEO, you’ll at times wear almost every other hat, from the janitor on up. Expect to get your hands dirty in this type of franchise.

Executive franchise businesses

In an executive franchise, you will have little interaction with customers, if any. In this type of franchise, you’ll hire a manager or other key employees to run the day-to-day business while you play a supervisory role and take on bigger-picture strategy and decisions.

Your role as owner of an executive franchise business will resemble the role you’re familiar with as a former executive. The downside is that if your subordinates don’t perform well, their failures will directly impact your bottom line. Ultimately, the buck stops with you.

Other factors to consider

Here are additional factors to consider when making your decision:

Employees. Some franchise businesses involve the hiring of a large number of minimum-wage employees. Others require fewer or more highly skilled employees. When assessing franchise opportunities, take into account the type of employee you can most effectively manage and work with.

Hours. Consider the high-volume times for the business, as you’ll likely need to be involved during those hours. For example, many retail franchise businesses do most of their volume during the evenings and weekends. If you’re accustomed to having your evenings and weekends free, this may be a big adjustment.

Operating margins. Starting any new business is going to involve making some mistakes and some businesses have a wider margin. Many of these franchises are in the service or sales sectors, though you can also find such opportunities in retail or food if you research carefully.

 

If you’re a displaced executive, the franchise industry represents a potentially great opportunity for your life after layoff. Be sure to determine what you want from a business and gather all the information you need to ensure the franchise you buy is the right one for you. An experienced FranChoice consultant can help you sort through the overwhelming number of opportunities in franchising.

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