How to Choose a Franchise
Franchising is something that is taking over the market, and it is becoming hot. As per the International Franchise Association, in the U.S., a new franchise is opened every eight minutes as everyone is choosing a franchise as their business option. And due to this, the overall franchise sales in the U.S. currently accounts for more than 40% of the retail sales.
In fact, many small business owners tend to opt for opening a franchise rather than creating a company all from scratch. And with the increase in the number of these small business owners purchasing the franchises, there is also an increase in the number of businesses that are willing to sell franchises with their services and goods. This gives the buyer open opportunities for choosing a franchise as per their desire from the vast numbers.
With all the choices, how does a person choose a franchise that would take them the right way? For this, there isn’t any specific answer that would give you the right choice. But there are some suggestions that can help you remove all the guessing work from the franchise shopping tour that you are about to embark on.
For choosing a franchise that is right for you, use the following tips:
Ask the Franchisor for the copy of the Uniform Franchise Offering Circular (UFOC)
After you are done choosing a franchise, ensure that you ask the franchisor to give you the UFOC. As per the federal law, the franchisor is obliged to offer you a copy of the franchise disclosure statement as soon as you have become one of their franchises’ prospect.
Even though the document is provided to you after the agreement has been made, you can ask for it ahead of time as well. This would help you understand all the terms before you strike the deal. Get the help of your lawyer to understand and review the document.
After reading the UFOC, if you are still interested, visit the offices of the franchisor
When you are satisfied with the document, visit the franchisor and talk to them. You can visit their office and even spend time with them to understand all about the company. This is something very important as with this process you would be able to understand if you share the same culture and values.
Choosing a franchise doesn’t just involve picking a company, it is more about being the company. Hence, it is vital to know if you want the same things as what the franchisor wants and talking to them is the only way you would both be on the same page or find out if you are on the same page.
Request from the franchisor the entire list of the franchises of the company
After getting the list, make sure that you research to see if the list is the complete one. If the list has a less number of franchisees than the actual number of what you got when you researched it, question it. Call almost every franchisee to learn about the company in detail. Here are some questions that you can ask them to know more:
- Are the franchisor’s behavior and attitude towards the company the same as when you met him in the beginning?
- Are they responsive?
- Do they listen to all your queries?
- Do you get the proper support from them?
- Overall, are you happy with the franchisor and the way things are going?
All these questions are important since everything is not just about choosing a franchise, it is about understanding your future and this would give you an idea of how your future with this franchisor would be. Moreover, since speaking about the money matters can be delicate, and instead of asking them how much they make directly, here are some questions that you can ask:
- Would a person be able to earn well with this franchisor?
- How much volume of money can probably come in with this business?
Talk to every kind of franchise owner
Despite the number of franchisees that you talk to, ensure that you speak to the franchisee who has many stores and also the one that has just one store. In this case, you are trying to learn if the franchisor is a right person and if the franchisee is treated well by them.
Basically, since you are about to start a store as a single owner, you need to ensure that the franchisor supports you in the right way and pays attention to what you have to say always.
Request for the list of those franchisors who have left the system
Ensure that you get the complete list from the client and then call these people. Ask them the reason for leaving this business and how was the process. This would give you a better idea of all that is going wrong with the franchise and would help you in choosing a franchise that is right for you.
Visit as many franchise stores as you can physically
Walking into any franchise and seeing how they work, would give you an idea and feel of how you would be as an owner. If you are not a person who wants to be involved in a lot of business issues, and the franchise would lead to that, you can at least find it out on time and back off.
As mentioned above, choosing a franchise is not just about sitting at home and letting the profits flow in. It has a lot of work as well, just like any average company. The most successful franchisors are those that have understood that it is a partnership sort of business. Other than that, franchises are more of a give and take that is between a franchisor and franchisee.
And by doing your homework and using the tips mentioned above, you would be able to eliminate any of the guessing work and be sure about what you would be in some years with the partners you are choosing.