Choosing the right franchise opportunity should not be taken lightly
So, you’ve decided that you want to invest in a franchise. Congratulations!
But, now how do you know which franchise opportunity is going to be right for you? There are many things to consider in franchise ownership. You need to think about what you actually want to do, how much capital you have to invest, which investment is most likely to produce the quickest return and more.
Franchise vs. Independent
Maybe you’ve already decided, but it’s important, to be honest with yourself in determining if franchise ownership is right for you. There are advantages and disadvantages to franchise ownership versus independent business ownership. If you’re the type that has a hard time following rules and enjoys the total freedom to do as you wish with your business, franchise ownership is probably not right for you. On the other hand, if you prefer to invest your time and money into a proven system with structure then you would likely do well as a franchisee.
Identify Your Strengths & Passions
Most entrepreneurs launch their business based on something they already know—pulling from years of their own professional experience. The best segment to start your own business in is where your strengths overlap with what you’re passionate about. For example, most Crestcom franchisees come from a background in business leadership, often in the human resources or training and development areas. They are passionate about helping people become better leaders and helping businesses improve. Their professional experiences and their passion for helping people made Crestcom leadership training a perfect opportunity for them.
Any consultant will tell you to research the industry before specific franchises. This is because you need to understand if there is a viable market for the type of franchise you’re thinking about investing in. Gaining your own background knowledge into the market size, industry SWOT, and future trends before diving into the details of any given franchise will benefit you down the road.
Identify Franchise Options
There are many places you can go to research your franchise options. Some people decide to work with a specialized franchise broker or consultant (many of whom are franchisees themselves). They will work with you to understand what you are looking for and can help pinpoint specific brands that may be a good fit for you. You’ll want to make sure that you have more than one option to research. Be leery of any consultant or broker who does not present you with at least two or three franchise options to consider.
Due diligence is an important step in any investment opportunity, and franchise ownership is certainly no exception. The franchisor will provide you with a list of current and past franchisees to call and talk with about their experiences. They will often also host at least one in-person meeting (often called a “Discovery Day”) where you will travel to the corporate headquarters and meet members of the team. The franchisor will also have an internal counselor to walk through their Franchise Disclosure Document (FDD). If you are working with a franchise consultant, they will also often be a good resource for understanding the contract and disclosures of any franchise they present to you. It is; however, advisable to hire your own legal counsel who has expertise in franchising to give you the most unbiased, third-party advice.
Choosing the right franchise for you is no easy task. Don’t expect it to happen in a matter of days, and definitely, don’t take your decision lightly. As you get further along the process, the franchisor is trying to determine if you are the best person to join their system just as much as you are. It does not serve a franchisor well to bring on a franchisee who is unable or unwilling to succeed. Being open and honest with yourself and your contacts with the franchisor is key to making the right decision.
Do you have questions about franchise ownership? We’d love to answer them!