Franchises are everywhere. If you’ve ever eaten at McDonald’s, rented a car from Hertz, or stayed at a Marriott, you’ve encountered a franchise. The International Franchise Association (IFA) succinctly describes franchising as, “a method for expanding a business and distributing goods and services through a licensing relationship.”
Knowing you want to buy a franchise is the easy part; deciding which franchise to open is the hard part. You may hire brokers or consultants, do research on franchise informational websites, or interact with the current owners of your first pick. Every way has the potential to work, but the key point is doing your research before signing on the dotted line. Choosing the wrong franchise can open you to years of misery and regret. The right franchise should fit your background and personality well, and lead you down a path of success.
Try doing your research in the following ways:
- The Internet– Starting on Google is great, and helps give you a preliminary idea of where you might go. Researching franchise oriented websites is best. Start searching sites like:
- Franchise Broker– Hiring a franchise broker can be an attractive option for researching franchises as they offer their services for free. They are paid commission by the franchisor you sign on with, making the brokers more like recruiters. The downside of using this free service is that the brokers are only going to introduce you to a limited set of franchises, the ones they have a contract with and receive a commission from. If the franchise you are meant for isn’t on their list, it will turn into a lost opportunity.
- Franchise consultant– Franchise consultants are similar to brokers in that consultants also work with you to find the franchise that suits you. The main difference is that consultants charge a fee for their service, and not everyone can afford it. If money is not a concern, then consultants may be your best option as they have no agenda other than finding the perfect franchise. Consultants are not limited to a small selection of franchisors as they don’t need a contract with specific franchises to get paid. They have more freedom and are highly invested in your happiness and finding the right fit, no matter how long it takes.
- Franchise expositions– Expos are fantastic at letting you research several options at once. Franchisors from various markets are extra motivated to introduce you to their system and product/service and are willing to make special deals that you can only take advantage of at the show. The biggest negative is the intense pressure you may feel to sign on with a franchisor before you’ve had a chance to do enough research.
- Networking– Once you have one or two franchises you are interested in, take the next step and contact the franchisor and franchisees to learn more information. The franchisor may have an event commonly known as Discovery Day where you go to their headquarters and meet the upper-level executives as well as the other key members of their team such as marketing and customer service. Networking with the franchisees is a great way to find out the little details the franchisor may not advertise. Ask the franchisees questions like:
- What business sector did they come from before opening the franchise?
- Why did they choose the franchise?
- Are they happy with their decision?
- What do they wish they’d known before buying the franchise?
- Franchise Attorney– Before you sign any papers, consult with a franchise attorney. Their job is to look over all the franchise documents and find any legal issues you may have missed or been kept from finding out. Signing anything without an attorney is risky, and could be harmful to your future success.
Want more information? Check out The Strengths of Franchising