Your Guide to Selecting the Right Franchise Business
For many people, business ownership represents the foundation of their American Dream. The idea of being your own boss, having a relatively flexible schedule, and taking ownership of a business and its successes is incredibly attractive to entrepreneurs around the country.
Luckily, there are many different ways to start a business, including becoming the owner of a location for an already-successful franchise.
Franchising remains popular for a variety of reasons: there are thousands of opportunities in a number of industries, training is provided, the initial investment is lower than it might be if you were starting from scratch, and the business idea has already been tested amongst consumers. There’s more to running a successful franchise business than finding a company whose product you like, though. Choosing the best franchise opportunity means doing a hefty amount of research, asking the right questions, and more. Here's your guide to choosing a franchise.
What type of business do you want to run?
This is perhaps the most important question of all, yet would-be franchise owners tend to gloss over its importance.
You need to think about the type of schedule you want, how many hours you’d like to work each week, how hands-on you’d like to be, what industry you’d like to work in, and what you truly want out of the franchise business. People have wildly varying reasons for buying into a franchise — for example, are you looking for something you can run in addition to your full-time job? Would you like to own multiple locations eventually?
Understanding the costs of franchising
Once you have an idea about the type of franchise you might like to own, it’s time to get serious about the financial side of things. Understanding how much money you have available will help narrow down your list of possibilities, too.
Be weary of franchise fees that seem too good to be true, because they often are. According to David Omholt, the president of a franchise consulting firm called Entrepreneur Authority, "There's nothing more expensive than a cheap business. This probably will have a high turnover rate, will be more saturated and competitive, won't provide a lot of support and training, and won't be a business you can resell."
Getting to know the specifics of a franchise business
Once you understand the types of franchise businesses that might work for you and your finances, it’s time to contact potential franchise partners for more information. Some of this intel may be available on their websites or in other materials, but you’ll often have to ask for more specifics.
Next, it’s time to comb through the details to vet each possibility and determine whether they still seem like a good fit. Be brutal here, because further investigations will become much more detailed and time consuming. Your follow-up steps will include:
- Thoroughly studying the lengthy Franchise Disclosure Document.
- Call existing franchisees to ask them about their experiences. This is a great way to learn about how well their businesses are doing, how well the franchisor supports their franchisees, and more.
- Visiting the franchisor’s headquarters to meet the team, ask questions, and confirm that you’re comfortable moving forward.
Once you’re comfortable making a final decision, you’ll sign the necessary paperwork and begin the next steps toward becoming a successful business owner.