How to Evaluate Franchise Opportunities
Franchising is an effective business model for people who want to be in business for themselves but not by themselves. Franchising is simply a small business that already works and can be duplicated. No need to come up with a new idea, just execute the model. Now that you've decided you want to enter into the world of franchising, the work begins. What kind of business? Do the numbers make sense? Are other franchisees happy? Be prepared for the journey ahead. And be prepared to learn the good, the bad and the ugly.
Other People Are Reading
Instructions
-
-
1
Decide what industry makes sense for you. The beauty of franchising is the diversity of possibilities. Franchising offers everything from home cleaning services, to mailbox rental companies, to restaurants and everything in between. Think about what skill set you bring to the table. Are you looking to offer a service (pool cleaning, telemarketing), or are you thinking more along the lines of building a physical business (retail, food)?
-
2
Go to a website like franchising.com or franchisetimes.com and make a spreadsheet of companies that fit the industry you want. You need to be well-informed about all the different companies--franchised, non-franchised/corporate, independents--that make up this industry. On your spreadsheet, highlight which of these companies are franchises.
-
-
3
Get in touch with the franchise development manager at each of these companies. The large companies will have a dedicated team of development folks, maybe even regional folks. Often, you can fill out a request for information online, and you likely will get a call or email from a development person. Remember, this person is paid by the company, so expect the information to be biased.
-
4
Call other franchisees already in business. Get to know the good, bad and ugly. Ask them if they are making money. Find out all the costs involved in starting up and in ongoing operations. Make your last question: "Would you do this again?" Franchisees can tell you things that franchise development managers can't.
-
5
Make a speadsheet of the pros and cons of each company to help you decide which makes the most sense for you. Ask yourself: Which businesses are making money? Which one has the happiest franchisees? Which one has the best return? Which one has the best corporate support? Which one has startup expenses that make sense within your budget? From there you can make an educated decision.
-
1
References
Resources
- Photo Credit Jupiterimages/Brand X Pictures/Getty Images
