The key to choosing the right opportunity for the next phase of your life is to ask yourself some very important questions; how you answer each of these questions will guide you towards specific types of franchises.
By Theresa Huszka, CFE, Senior Consultant, MSA Worldwide
So you’ve decided to buy a franchise. You begin researching your options, and realize that there are over 3,000 franchise systems representing over 120 different industries in the United States – and hundreds more international brands that are looking for local franchisees to help them break into the US market…talk about feeling overwhelmed!
Where to Start
The first thing you need to do, once you’ve decided to purchase a franchise, is to sit down and have a long, honest talk with yourself. The key to choosing the right opportunity for the next phase of your life is to ask yourself some very important questions such as: What motivates you? What type of lifestyle are you looking for? Is this an investment you want to flip in 5 to 7 years, or are you creating a legacy business for your children to inherit? What level of investment are you comfortable with? These are just a few of the questions you need to answer for yourself before you even begin researching concepts, as each answer will help you eliminate various opportunities that are available based on your choices.
The way you answer each of the above questions will guide you towards specific types of franchises as opposed to others. For example, if you are leaving corporate America and you’re looking for a more flexible lifestyle, you might consider a home-based or mobile franchise that allows you to manage your schedule and days of operation versus a retail franchise with set days and hours you must be open.
If you are a bit on the entrepreneurial side, you might look for an emerging franchise system that may still be fine-tuning their systems and processes where you can have greater input into the evolution of the business, versus a more mature franchise system which would generally offer less flexibility and more structured systems and processes that you would be required to adhere to.
The Best Opportunity for You
Once you’ve narrowed down the style of franchise you would like (home based, mobile, retail), you need to begin fine-tuning the details. Obviously finding a franchise within your investment range is critical – no sense researching something you can’t afford – but within your investment range there will be a multitude of opportunities from a variety of different industries whose systems are all different. The key to finding the right one for you is to find a business with a culture that you can embrace.
Find a business you can be passionate about; let’s face it, in most franchise relationships you are committing to anywhere from five to twenty years with the franchisor, so you had better really believe in the brand promise and love what you do! You want to work with a franchise system whose goals and objectives you can embrace and represent in your local market. You will be the driving force that duplicates the brand promise for the franchisor in your location.
You will train your team of employees to deliver the consumer experience in your market, and the only way to do that effectively is if you embrace the culture. Imagine being a vegetarian and owning a hot dog franchise…it is fairly difficult to promote your product when you can’t be passionate about it.
Are all Franchise Systems the Same?
So you’ve done your homework and narrowed it down to a handful of opportunities that you feel genuinely excited to be a part of: now begins the real work. Once you have narrowed down the field to your top two or three choices for investment, you should begin comparing the value of the brands (for your dollars invested) and the services that each will provide on an ongoing basis.
Does each of the systems you are considering have all of the services you would want in place and operational? Do they have a clear vision and plan for growth for the next five to ten years? Do they offer training, marketing, real estate, and operational support? Do they provide a Financial Performance Representation (FPR), and is it strong? If not, what are they hiding? Is the staff at the corporate office qualified and accessible? And most importantly – are their franchisees happy? Would they make the same decision if they knew then what they know now? In my humble opinion, this is the most valuable piece of information you can have when making a buying decision. Has the franchisor lived up to the commitments they made to their existing franchisees? If they have, then you have a strong contender.
Lastly, don’t overlook calling the franchisees that have left the system; whether the business may have not succeeded for a variety of reasons, or whether it was a planned exit, how the franchisor handled the exit strategy will tell you a lot about their corporate culture.
Buying a franchise is a serious commitment, and let’s face it…it’s not for everyone. But with a little soul searching and some due diligence, it can be one of the best decisions you’ve ever made.