One of the biggest benefits of purchasing a franchise is that when you do so, you go into business for yourself but not by yourself. A franchise business already has:
- Regional or national brand recognition.
- A solid business plan that has stood the test of time.
- Tried-and-tested systems for operations, customer service, etc.
With these things in place, it is often easier to get financing, and the success rate will be higher than starting a business from scratch.
However, to be successful as a franchise business owner, you must find the right franchise business for you—your personality, experience, and goals. This article will guide you in how to do that.
How to Find the Right Franchise Business in 3 Steps
To find the right franchise business, follow these steps: self-evaluation, research, and interviewing the franchisor. Here is what each of these steps entails.
Step 1: Self-Evaluation
To find the right franchise business, the first step is some serious soul searching. When you’re honest, you can find the perfect match that will lead to profit and personal satisfaction. Here are some questions to ask yourself:
- What are your strengths and weaknesses? Think carefully and write your answers down. After you evaluate yourself, ask three of your closest family or friends to share their thoughts on your strengths and weaknesses too. Do their answers match yours? Is there anything they said that surprised you?
- Where do you have experience? Franchise businesses include restaurants, retail stores, hotels, cleaning services, fitness centers, and more. It is best to pick an industry in which you have prior experience.
- What are your business skills like? How are you at the major elements of business, including sales, marketing, operations, technology, finance, customer service, and human resources? Where do you excel, and where will you need extra help/training?
- Can you follow the rules? Franchise business owners must follow the franchise’s structure, guidelines, and business system. As you think about how to find the right franchise business, it’s also important to consider whether a franchise business is a good fit for your personality or if you would be better off starting your own business.
- How much money can you invest? Assessing your budget will give you a realistic sense of what franchise opportunities are possible. Upfront fees of franchises can vary from less than $10,000 to upward of $1 million. You’ll want to account for the money you’ll have to pay to get the franchise up and running and the extra money you’ll need to operate the business (and live off) while you get the business off the ground.
- Why do you want to buy a franchise? Some people want the franchise business to be their primary source of income. Others wish to purchase a franchise as a side hustle or hobby. Why do you want to buy a franchise? What are your short and long-term goals?
- How involved do you want to be? Another consideration is how much you want to put into the business in terms of time commitment. Do you want to be directly involved in running the business daily? What hours do you want to work? Answering these questions honestly will help you select franchises that fit your lifestyle.
Step 2: Research
The self-evaluation questions above can help you learn about yourself and what kind of franchise opportunities are a good match. Next up in how to find the right franchise business is to research the options that are available to you. Here are some ways to approach your research.
- IFA Database: The International Franchise Association has a great database of franchise opportunities to check out here. You can sort franchises by industry (food & restaurants, senior care & healthcare, cleaning & maintenance, etc.). You can also narrow down choices by location and how much you can invest.
- Franchise 500 Ranking: You can also browse franchise opportunities on Entrepreneur’s Franchise 500 Ranking. Browse the list or search by name or category, then click to learn about the company profile, initial investment, and other details.
- Get Help: If you are a veteran or a member of a minority group, you can get help selecting a franchise via VetFran and DiversityFran, respectively.
- Attend Events: There are many franchise-related events to learn more about your opportunities. The International Franchise Association has an annual convention, and the Franchise Expo has events in major cities across the country, including New York, Atlanta, Chicago, Houston, San Francisco, and more.
- Market Research: As you start to narrow down all the possibilities to a handful of promising options, it’s time to do market research to see if the market is promising for your selected franchises.
- Franchisee Interviews: If you have a shortlist of possible franchises, you can also consider reaching out to franchisees in that franchise system and setting up a time to meet and ask them about their experience.
- Discovery Days: A discovery day is a special event that a franchise holds to bring in prospective franchisees and tell them more about the franchise opportunity. It can be a great way to learn about the franchise and compare your options. For more on preparing for a Discovery Day, check out this article from Franchise Business Review.
- Franchise Disclosure Document: The Franchise Disclosure Document (FDD) provides more information about the franchisor, the franchise system, and the franchisee requirements. The FDD is required and includes 23 specific items, including fees, financing, training, obligations, and more. Review it carefully and get help from an experienced attorney to evaluate the FDD before making a decision.
Step 3: Interviewing the Franchisor
You have evaluated yourself and researched carefully to narrow it down to a few specific franchise opportunities. The final step in how to find the right franchise business is to interview the franchisor to get answers to any lingering questions you may have. Here are some questions you may want to ask.
- What are your criteria for choosing a franchisee? Franchisors typically have a list of qualifications to select franchisees that are a good fit for their brand. Find out what is important for the franchisor and determine if you qualify.
- What sets your franchise apart from the competitors? It is quite insightful to hear the franchisor’s take on the brand’s unique selling points and its advantages over the competition.
- How do you support your franchisees? Find out what the initial training entails and what ongoing support the franchisor offers to help franchisees learn and grow.
- What are your expectations for franchisees? From payments to operations, it’s important to understand what is required of you if you purchase a franchise business.
- How much liquid capital will I need until the franchise breaks even? Franchisors can share insight on the average amount of time their franchisors need to cover costs before the business starts turning a profit.
In addition to these questions, you may also ask about the franchise’s history, get clarity on the initial investment and ongoing fees, and find out about the success rate and income potential.
How to Find the Right Franchise Business
The question of how to find the right franchise business is answered in a simple 3 step process, but it is something that should not be rushed. Each step has many components and should be evaluated in-depth to find the perfect fit. When you find the right franchise business, everything else will run more smoothly. Best of luck on your journey!