When you are starting a franchise, you must become a detective before you can become a business owner.
Your franchise business will succeed only if you have thoroughly investigated potential franchises. Dig around in the franchise world and learn as much as you can about the franchise opportunity you are considering.
Start Digging
So put on your trenchcoat and start sleuthing to uncover these truths about any potential franchise:
- Explore the franchise world by reading industry websites, magazines and associations. This will give you broad knowledge of trends in the industry, plus information about your franchise choice.
- Ask the people who are in the business for a better understanding of the nature of the franchise business. If you can, visit the nearest franchise of the concept you are investigating. Talk to the manager. Pay attention to how well the business is run. Obviously, any franchise concept can have a bad outlet here and there, but this should raise some flags if the franchise is floundering or appears to be poorly run.
- Read the Franchise Disclosure Document carefully. It will give you all the background information you need to know about the company. It will also tell you who the key executives are, the company’s litigation history and other important details. It also should clearly spell out any fees you are going to incur, plus what training or support you should expect.
- Pay close attention to the litigation part of the Franchise Disclosure Document. You should hire a competent franchise attorney at this step. He or she should be able to help you understand the lawsuits that have been brought on the franchisor and discuss honestly what, if any, spell trouble.
- Play detective as you go around asking the ex and present franchisees of the franchise company. Their answer will give you an insider view of the system. Also make sure you tally the positive and the negative comments to come to a conclusion.
- Visit the franchise on the “Discovery Day.” Don’t forget to carry a list of questions and ask around to check out how the system runs. Be observant and notice how well the tour has been organized. If the franchisor is really serious about its franchise business for sale offers, it will ensure that you get to see all the relevant departments.
- If you are satisfied with your investigation, ask about the franchise agreement. Make sure you and your franchise attorney go through it meticulously. Inquire whether any part of it can be changed to your favor (as the agreement is drafted by the franchisor).
- If this also goes right, then just sign it to become a franchise owner and hang up your detective’s hat, confident that you’ve chosen the right franchise concept.
The copyright of the article Find the Right Franchise in Self-Employment is owned by Sandy Smith. Permission to republish Find the Right Franchise in print or online must be granted by the author in writing.
