Even if you don’t have an idea of your own, you can still honor your entrepreneurial spirit by purchasing a franchise of an existing business. From Subway to McDonald’s to 7-Eleven to The UPS Store, there are numerous options for franchisees. The upfront investment may be great, but the rewards and revenue you can reap for years to come can easily surpass this initial commitment.
But what are the best ways to research available franchises and, most importantly, to find the one that’s right for you and your needs? Below are five different resources you can use to investigate franchises and help you evaluate which is right for you.
1. Attend a Franchise Exposition
- an easy way to investigate many different options at once.
- a chance to meet with other franchise owners and entrepreneurs.
- the ability to take advantage of special deals only available at the show.
In spite of these benefits, there is what could be considered a substantial drawback: expos can be hectic. You may feel pressured to sign on the dotted line before you’ve really had a chance to conduct due diligence, or you may find the expo floor to be too overwhelming and not the most contemplative place to assess your options. Nonetheless, expos provide a forum in which you can openly converse with people in similar situations, hopefully helping you find the ideal franchise opportunity for you.
2. Conduct Online Searches
Using Google is one way to go. There are, however, specialized sites dedicated to simply cataloging franchise options and the details associated with each. Some of these sites include:
- American Association for Franchisees and Dealers
- Franchise Expo
- Franchise Opportunities
- Franchise.org (International Franchise Association website)
Recognized media outlets like Entrepreneur magazine and Forbes also evaluate franchise opportunities on an annual basis and compile lists based on different criteria. If you’re not sure where to start, using one of these resources might be your best option, as it will provide you with an overview of franchise options.
Pay special attention to the criteria the different media outlets use to make their lists. You may find that each one lists a different franchise as the “best.” This can quickly get confusing if you’re uncertain about how different options are being evaluated.
3. Network With Current Franchise Owners
Getting answers to your questions from a current franchise owner is likely the most useful way to research your franchise opportunity. This could be as simple as walking into an existing franchise and requesting the owner’s info, or you can look for the printed business license and see who is listed as the owner. He or she might even be on your preferred social network, or a Google search might bring up some results about the local franchise, including the owner’s name. Also, be on the lookout for franchise networking opportunities that may be taking place in your area. Meetup.com may be a good option for this, or you can also use groups on LinkedIn.
4. Enlist the Aid of a Franchise Broker
Also known as business coaches, sales consultants and advisors, a franchise broker makes it his or her business to know what opportunities are available near you and guide you in choosing your best option. Brokers can also help you navigate the necessary paperwork and contracts.
When looking for a franchise broker, research his or her previous deals and what franchises he or she is associated with. Ideally, you want a broker who represents as many varied options as possible so that their recommendations will cover a wide range of opportunities. In the end, most brokers work for the franchises they represent, which can effect the recommendations they make. This isn’t a reason to avoid working with a certain broker; it’s just something to be aware of it. The above list of franchising sites can connect you with a broker, and your local Chamber of Commerce may also be a good resource to find one.
5. Read Trade Magazines and Websites
There are specific publications relating to franchise ownership as well as applicable industries, such as restaurants, hospitality, retail and more. Conducting a simple online search will uncover many of these different resources that can prove invaluable when researching and running your franchise. Franchise Times and Franchise USA are particularly popular options. The other benefit to these publications is they enable you to find out about networking options and ways to contact other franchisees.
Evaluating Your Franchise Options
Once you’ve conducted a search for different franchise options and narrowed down the list of potential businesses, you’ll want to spend a lot of time evaluating each one for its viability and appropriateness in relation to your goals. Here are some of the questions you should ask when evaluating your franchise choices:
- How long has the company been around? Generally, older companies are more stable and therefore able to offer more support to franchise owners.
- How long has the company allowed for franchises? Again, the longer a company has had franchisees, the more equipped they will be to maintain a support system for franchise owners and will understand the inherent challenges franchise owners face.
- How long will it take you to earn back your initial investment? The answer to this question may be different for everyone. You may want to see your initial monetary commitment earned back quickly, while others may be content to wait a bit before recouping that expense. It’s really up to you and your personal situation. However, you don’t want the projected timeframe to be too long. Anything can happen, and it would be unfortunate for you to have to close your business without first regaining some of the funds you’ve invested.
- What type of control does the franchisor exert? While you’ll definitely want a parent company that offers support, you want to be sure that you have some autonomy to run your franchise the best way you see fit. Additionally, you want to look for any continuing royalty fees or ongoing payments you will be required to make to the franchisor. These are not uncommon and, in most cases, should be expected, but it’s best to know exactly what you’re getting yourself into.
- How many franchises does the business have and where are they located? This will further help you decide how successful your franchise might be. If there are numerous successful franchise locations, chances are that you will also find success. You also want to be sure that your market isn’t oversaturated with franchise locations already. In some cases, like 7-Eleven or Dunkin’ Donuts, having multiple locations in close proximity is fine, but for other opportunities, it could greatly eat into your profit.
Owning a franchise can be a very lucrative and rewarding business venture for entrepreneurs looking to invest in a business that is already established with an existing customer base and name recognition. However, as with any business, there are risks associated, and it’s important to spend as much time as possible investigating your options so that you’re making an informed choice.