EVERYTHING FRANCHISING

Pulling it all together

Here are the recommended priorities in your franchise acquisition process:

EVERYTHING FRANCHISING

Pulling it all together

Here are the recommended priorities in your franchise acquisition process:

Priority 1 –
Self-Evaluation

Ask yourself what you really want to achieve by owning a business. Things like, what hours you want to work, what kinds of things are you good at and like to do, how much money can you afford to invest and what returns will you need to produce from the business? Where you want to live and operate your business, as well as what your exit plans are in the future.

Priority 2 –
Financing

Do you have a clear idea of how much money will be available to you. Unless you’re sitting on a mountain of cash, start this process early on because the answers can be quite different from what they were just a few months ago, perhaps even from when you first started reading this website!

Priority 3 –
Evaluate industry categories

Focus on industry groups or categories. Based on your impression of each of these segments, ask yourself if it appears to meet the desired criteria you identified in Step 1; If it doesn’t, cross it off. You’ll end up with a list of possible industry segments.

Priority 4 –
Look for recession-resistant segments

Take your list of possible industry segments and ask yourself a simple question: “Do I believe this is a business that will continue to do well regardless of the state of the economy?” This will be true of businesses like damage restoration, fast food, senior care or hair cutting, but it may not be true of others like optional expensive services businesses or upscale retail. Cross off industry segments if you believe that they’re not recession resistant so you give yourself the best possible chance for a successful decision.

Priority 5 –
Start identifying individual franchise companies

Once you’ve narrowed down the list, look at individual companies and pick one that you think is representative of the category. Try to select companies that will have territories available in your desired area. From this list of companies, pick a few that seem most interesting or attractive to you based on your criteria identified in Step 1.

Priority 6 –
Request preliminary information from franchisors

After selecting a few companies that match with you, contact the companies and request basic franchise information. This might be on a website or in brochures, videos or other materials they may send you after you visit with one of their development staff. Review the preliminary information from each company to determine if, based on this further information, the company still appears to meet your criteria and is worth spending more time on.

Priority 7 –
Study the FDD

After your initial contacts and the submission of a qualification questionnaire, the franchisor will typically provide you with its Franchisor Disclosure Document (FDD), an FTC-mandated disclosure document. The FDD contains extensive information about the franchise, including the history of the executives, any litigation the company has experienced, the names and contact information for the current franchisees, and a copy of the franchise contract. Review this information carefully and get any questions you have answered before you proceed to the next step.

Priority 8 –
Call existing franchisees

The best source of information for any franchise system is the existing franchisees. Contact franchisees and ask them all about the business, their lives as franchisees, and what they think of the company. This is a good tool for evaluating how well a franchisor supports its franchisees, whether the startup cost projections are realistic and how effective the provided marketing materials are.

Priority 9 –
Visit the franchisor

Assuming everything else checks out, your second-to-last step is usually a visit to franchisor headquarters. This is a great time to get any final questions answered and to meet the people who will be helping you get your business up and running. Though this may seem like a formality, it’s a vital check-and-balance to make sure you are completely comfortable and confident in the company you are about to enter into business with. Also, keep in mind that they will be carefully evaluating you as a potential franchisee at the same time, so this final judgment is a two-way street.

Priority 10 –
Make your decision

Once you’ve completed your Due Diligence on all of your final franchise opportunities under consideration, it’s time to make your final decision. You can be sure that you’ve made your choice for all of the right reasons, that this franchise opportunity does all of the following:

  • Matches your financial resources
  • Provides you with the lifestyle you imagined
  • Uses your particular skills and experience
  • Provides a recession-resistant product or service
  • Has a majority of happy and successful franchisees
  • Employs an experienced and enthusiastic staff of personnel who will help you achieve your dreams of business ownership success

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