Never Buy a Franchise Without Researching These 5 Sources

The next excerpt is from Mark Siebert‘s guide The Franchisee Handbook: Everything You Need to Know About Buying a Franchise. Purchase it now from Amazon | Barnes & Noble | Apple Books | IndieBound

Whereas the web is a superb device for preliminary research, it ought to function a basis fairly than the only supply of knowledge. Combining on-line analysis with real-world exploration — similar to participating with franchisors, brokers, rivals, and commerce occasions — will present a extra complete understanding of a franchise alternative.

Past digital assets, visiting franchise areas (each native and in distant markets) permits potential franchisees to judge operational high quality, consistency, and buyer expertise. Observing day-to-day operations and evaluating rivals can reveal potential challenges or alternatives not evident on-line or in promotional supplies.

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The franchisor

Your first supply of knowledge on a franchise firm would be the franchise company itself. It can typi­cally be capable of give you a wealth of knowledge, together with the franchise disclosure doc (FDD), franchise brochures or different promotional supplies, hyperlinks to franchisee testimonials, and maybe data on the trade normally.

You may anticipate the franchise salespeople will try and qualify you on the primary name. Most will ask you to fill out a confidential data request kind (CIRF) and talk about their course of for mutual analysis. Typical qualifying questions will contain your capitalization, desired geographical area, and timetable for deciding. Assuming you are critical about investing in a franchise, try to be frank together with your solutions.

The salesperson will then usually suggest a collection of steps you may each undergo to be taught extra about one another. A few of the steps might embody a overview name to go over the FDD, market visits, calls to franchisees, and investigating the marketplace for your companies. Make the most of this useful resource as quickly as you are right down to your brief listing.

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Franchise brokers

One other useful resource that may assist information you thru the method of shopping for a franchise is a franchise broker. Brokers, who usually name themselves “franchise con­sultants,” could be a beneficial device in serving to you assess your choices.

In contrast to a franchise salesperson, a dealer is not restricted to a single franchise idea and will characterize 100 or extra franchisors. In the most effective networks, the dealer is educated to assist a potential franchisee slim their decisions to a handful of opportunities for which they’re well-suited.

Sometimes, you will not pay a payment to the franchise broker. They supply this service in alternate for successful payment (primarily a fee) paid by the franchisor — usually within the vary of $20,000 or extra — if an introduction they make ends in a sale.

Finally, brokers are an awesome useful resource that may present real worth, however they don’t seem to be the fully unbiased purchaser’s advocates some would have you ever imagine. So whereas brokers are a useful resource you need to definitely take into account, finally you need to ensure they’ve steered you in the correct path.

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Commerce and Trade Exhibits

One other excellent spot to get data on franchises you would possibly need to take into account is at franchise trade shows and, when you’re wanting in a particular subject, trade reveals. Franchise reveals specifically will provide you with a chance to talk with a number of hundred franchisors from a wide range of industries in simply a few days.

These reveals produce other benefits as nicely. Usually talking, they provide seminars on all facets of franchising — providing you with an opportunity to be taught before you purchase. These seminars function subjects like trade developments, understanding contract provisions, veterans’ franchise packages, financing, and general success as a franchisee and are sometimes price attending.

Understand that these reveals might not present a consultant pattern of the franchise marketplace. The exhibitors are likely to skew barely towards youthful franchises and ones with decrease funding ranges.

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Trade associations

The website of the International Franchise Association comprises a wealth of knowledge on franchising. Along with permitting you to go looking choose franchisors, it supplies data on trade suppliers in areas similar to finance, insurance coverage, veterans’ packages, minority packages, and the franchise shopping for course of.

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Opponents

One other factor try to be doing is visiting competing companies — each franchises and independents — in your group. Drive round for a day or two, device round on the web and begin taking notes. Who’re the competitors within the companies you’re contemplating? How lengthy have they been round? What are their aggressive strengths and weaknesses? What’s their pricing construction? What sort of areas have they got? Write all of it down — it can present the grist for some good questions for potential franchisors afterward.

Additionally, go to any native institutions which can be in the identical basic phase you are contemplating throughout off-peak hours. Discuss to the workers, who are sometimes surprisingly prepared to share details about how the enterprise is doing if approached appropriately. Get a really feel for a way these companies compete within the market.

For those who’re thinking about a enterprise that does not have a bodily presence, spend your “drive time” on the web their web site. Observe their costs and the way they place the provide. Attempt to get a feel for a way large their market is. If it is a service-based enterprise, name them up and ask for a quote.

Discover out what benefits they’ve and the way they’re going to compete with you. Ask them the identical questions you requested your focused franchisor. What assist companies can they depend on? What does their payment construction appear to be? What do they consider the market and the franchisor? Maybe they will inform you one thing in regards to the firm you did not already know.

When you’re at it, you may additionally need to go to areas to your goal franchisor in some distant markets. See whether or not they’re all run in the identical method. Do they provide the identical services and products, and at related costs? Are their areas laid out the identical? Are all of them clear and well-run? In case your first response is, “I can do a greater job than they do,” which means the franchisor is probably not doing a very good job of high quality management — and people substandard franchisees will finally be representing you, as they’re going to be flying the identical flag and telling their prospects what they will anticipate after they go to your location.

Additionally, attempt to get a really feel for what the proprietor or supervisor of the enterprise does on a day-to-day foundation. What might seem glamorous when studying about it on the web might become extra mundane when you find yourself doing the job day in and time out.