If you've weighed up the pros and cons of franchising and feel that this is the right business choice for you, it's time to start doing your homework. With many franchisors out there clamouring for attention, identifying the franchise which will suit you and earn you the best returns can be difficult. After all, if you're going to make a success of your franchise, it will be a long term investment. You need to choose a franchise with real ongoing potential, and a franchisor you can build a strong, productive relationship with.
Of course, there are no guarantees in the world of business. And, while franchises do have a high success rate compared to fledgling independent businesses, if you choose the wrong opportunity, you could find yourself with a flop on your hands – and nothing to show for it. That's why it's so essential that you take time to research your options, speak to lots of different franchises, talk to lots of successful franchisees and get a real feel for the franchise market in your chosen niche.
At the end of the day, there's no foolproof way to select a winning franchise. The most promising opportunities can go awry, or seemingly hopeless franchises can turn to gold in the right hands. However, if you undertake rigorous research and careful assessment of the market and your shortlist of opportunities, you can heighten your chances of success. Here are a few essentials to consider when you make your assessment…
Related: The Pros And Cons Of Franchising
Accreditations are not the only mark of a well operated franchise, but they do provide prospective franchisees with a little more peace of mind before they make the leap. There are lots of different franchising bodies around the world who have strict membership criteria to ensure the businesses they approve subscribe to high ethical business standards.
Even more importantly, take plenty of time (and seek expert help from an accountant if necessary) to assess your finances and the financial burden of your potential franchise. How much can you realistically afford to invest? How much are you prepared to borrow to get on board? Once you have a good handle on what you're financially capable of doing, really nail down your potential franchisor on the financials. Are historic returns based on verified, real life figures from sister franchises? Will there be working capital requirements during the early months?
Money matters may be extremely important from a practical standpoint but, above all, it's how well you and your franchise are suited to each other which could make all the difference. Consider your interests, your skills, your sphere of knowledge, the previous industries you've worked in. Think carefully about how much of your personal time you're prepared to devote to your new undertaking. When you have a firm idea of where you are personally, it's essential that you ensue your franchisor is prepared to work with you on a basis you feel comfortable with. While they assess your suitability, you should be assessing theirs. Always speak with current and former franchisees, and spend time getting to know the management, their approaches and the company culture before you get on board.
The Nitty Gritty
The money's right, the culture is right, it's a good fit for you and your lifestyle – but there is still a long list of questions and tasks you'll need to work through before you've thoroughly assessed a potential franchise, including:
- Due diligence on the franchise in question.
- Meeting the people you'll be working most closely with.
- Understanding daily operations.
- Finding out about availability of training and support.
- Understanding all ongoing fees.
- Learning about the history of the franchise – and its future goals.
- Has the franchise lost any franchisees?
- If yes, why? Can you contact them?
- Where does the franchisor see the franchise in ten years time?
Finally it's time to bring the professionals in. If you're serious about conducting a thorough assessment of your prospective franchise before you sign on the dotted line, it's a good idea to seek a professional opinion.
From accountants who can look over the numbers, to solicitors who can look over legal agreements and even business consultants who can advise you – it's worth investing a little time and money now to ensure you're making the right decision over the long term.