All franchises are not created equal. It’s important to do your homework to find a franchise system that’s compatible with your philosophies, management style, goals and more.
In general, here’s some points to consider when researching various franchise systems:
1. Industry growth. Are you looking at a franchise in an industry that is growing or is it trendy? How much competition is in your specific area? An ice cream shop might be a good idea, but if there are a dozen already in your territory, you might have trouble being prosperous.
2. Franchise growth. Is the franchisor growing? How many locations do they hope to open this year and how many did they open last year? How many locations have failed since its inception? How many locations do they intend to open in the territory you are looking at? These are all questions you should answer while doing your homework.
3. Have enough working capital. Too many businesses fail because they are under-funded. In addition to the initial fee, how much cash will you need to stay afloat until you become profitable? Plan on the worst scenario just in case.
4. Experience. Will it give you a head start if you have previous industry experience or does it matter?
5. Customer research. What do its customers have to say? There are many reputable, online sites such as Google and Yelp where customers can write reviews. See how satisfied or dissatisfied their customers are.
6. Keeping up with the times. Technology rapidly changes. Is their internal customer support and accounting systems up-to-date? What is the franchisor’s web presence? Are they keeping up with Internet Marketing?
7. Support. You want a Franchisor that supports you not only during the start-up phase but in growing your business in the long run. Remember, there are some fly by night franchises that are just interested in collecting the initial fees who don’t care if their franchises fail. Make sure there is an emphasis on ongoing support and training.
8. Personalities. Have numerous conversations with top management and their experience in franchising. What are their philosophies? Remember, you have to follow the franchisor’s business plan. Understand what kind of flexibility and control you want out of your small business before you sign up as a franchisee.
Discovery Day is the perfect opportunity to get many of your questions answered. When you visit the Franchisor’s location, come prepared with an extensive list of questions. Remember that they are interviewing you just as you are interviewing them so that it is a win/win for both parties.