Use These 3 Steps to Find The Perfect Franchise Opportunity For You Once you've decided to buy, here are three steps for finding the franchise that's right for you.
By Ray Titus Edited by Carl Stoffers
Key Takeaways
- First, you must honestly evaluate your motivations, strengths, and weaknesses.
- Build a support team, including a broker, lawyer, and accountant, to guide you through the process.
- Use resources like Entrepreneur's Franchise 500 to assess the industry and specific franchises.
This story appears in the September 2024 issue of Start Up.
You've decided to take your career to the next level by buying a franchise. Now what? With more than 3,000 franchise brands in the United States, how do you find the one for you?
The answer is a balance between objective performance indicators and gut-level instinct. Before you begin, write a list of your wants, your needs, and your budget, as well as the things you're good at and enjoy doing versus those you're not good at and hate doing.
You don't have to do all of this alone — nor should you. Plan to have a team behind you: a broker (if you're buying an existing location) with a lawyer and an accountant when you're in the final stages. But in the end, you will be one of your own most critical resources when researching the franchise opportunity that could change your life.
1. Start with yourself.
Before anything else, ask yourself the following questions:
Why do I want to own a franchise? Can I really see myself doing this? If you're in this to get rich quickly, look elsewhere. Prosperity should be your goal, but you should know it will take a lot of hard work to get there. If your aim is to have more control over your career by running your own business, consider whether you're ready to be the boss in difficult times, like when sales are slow or the team isn't performing. Does owning a franchise still seem like a good fit?
Do I know enough about this industry to buy into it? You don't necessarily have to have run a restaurant, a sign-making company, or any business in the past to succeed in a franchise, but the more you know about the company and industry you're eyeing, the more successful you will likely be. And the less experienced or knowledgeable you are, the more critical it will be to identify people you can turn to for the answers you don't have.
2. Research the company and industry.
There are a wide variety of resources available to you — like Entrepreneur's Franchise 500, a franchise brand's website, and a brand's social media and online reviews. But you should dig deeper too.
Seek out franchises that have a history of success and strategic growth. A franchise that isn't adding locations and attracting new franchisees is just another business with multiple venues. Check out the market for the product or service, including growth opportunities. If a franchise brand doesn't have a clear plan for where (and where not) to place new locations, it may not be the best choice. The brand should also be willing to share backup materials for its earnings claims.
Once you've identified a franchise of interest, attend the franchise's Discovery Day, during which prospective franchisees explore the brand to learn more about it. Plan for the day by getting the agenda and learning whom you'll be meeting with. Prepare three to five questions for each person, to get a good feel for the company and its culture.
Ask the franchise to connect you with franchisees. Meet with a local representative and visit existing locations of the franchise and its competitors. The brand should be willing to let you speak to owners without a corporate chaperone. Ask the owners about their experience with the brand. Has the company provided adequate training and support? Does it seem to care about its franchisees? And the bottom line: Knowing what they know now, would they do it again?
If you're interested in the company, make sure it has resources for training, setup, and ongoing support. You should expect detailed guidance on choosing and setting up your location, thorough training for your team, and networking opportunities to learn from vendors and fellow franchisees.
3. Be willing to walk away.
You'll be sinking a significant amount of your money, time, and heart into this investment, so don't rush it — and it's OK to drop a prospect that doesn't look or feel right at any time. At my company, United Franchise Group, we prepare for that possibility by making our deposit fully refundable before the final signing, in case the applicant isn't comfortable with the marketing, location, or lease before they commit to ownership. The last thing we want is a franchisee in a business they don't like.
Of all the factors to look for as you research, the overarching one should be the franchise's support and respect for you as a potential owner. You should get a sense that the brand is out for more than a cut of your revenue and is there to help you succeed. While you're investing in the franchise, the franchise should be investing in you — setting you up for success, which deepens their success.
