If you're reading this, you already know that franchising is a different business model. That it involves paying the franchisor an initial franchise fee, as well as ongoing royalties and, often, paying into an advertising fund. And that you're willing to pay those costs for the privilege of using a recognized brand name and an operating system with a successful track record. Not to mention the initial and ongoing training and support the brand offers.
All good franchisors will offer these things, but how do you choose which one to buy? And once you have chosen a brand, what are the things you must do to minimize the risk of your investment--often your life's savings plus whatever you're about to borrow?
You (The Franchisee)
First, let's look at choosing a brand that's right for you. While many variables play a role in choosing the franchise brand that fits, experience has shown passion is often the most important. If you love what you do, success is more likely (all other things being equal). And what are some of those other things?
- How much money you're able or willing to beg, borrow, or steal
- Job skills required for success (technical vs. people skills)
- Hours of operation (business-to-business vs. late-night fast food)
- How many units you want (single unit vs. many vs. area developer)
- Your management style (hands-on operator vs. running a business)
- A succession plan (have one in place before buying)
What is your personality/temperament? Are you better off working on your own, or with others? Do you like to set your own hours or show up at the same time every day? Can you obey a franchise system's rules, or do you need to chart your own course? Do you like managing people or being left alone to do what you love? And finally, are you willing to commit for the next 10 or 20 years?
Them (The Franchisor)
It's also critical to carefully examine the potential franchisor, and do your due diligence before signing on the dotted line. Have you spoken with other franchisees in the system? How are franchisor-franchisee relations? Is there an effective franchisee advisory council? Does the franchisor listen? Is the franchisor involved in litigation? How is the training program? What kind of support does the franchisor provide?