Signs You Have Found The Right Franchise
You are excited!
When you pick a franchise, you want to find a franchise that excites you and one that you have a strong passion for. Of course you will have some fear as you are entering into a new arena that you may not be the most comfortable with.
An added bonus, if you have prior experience in the industry, then it may be an easier transition into entrepreneurship..
Communication is transparent
When you look for the right franchise don’t let someone sell you any franchise that benefits their self interest. You want to find the right people around you and a really good franchisor. Don’t be afraid to ask the tough questions. You should be cautious if they are giving you carefully crafted answers instead of the real answer.
On their end, they should be very communicative, helpful and have a vigor and general interest for answering questions. They should not be hiding the facts.
The Numbers match your goals
The numbers are key to any business especially if you are investing your hard earned capital into a franchise. Make sure you read the franchise disclosure document and also your franchise lawyer and franchise consultant meticulously look over it as well.
Ensure the numbers are growing year over year and there is consistent growth. Also, be alert if there is a lot of debt or if the franchise is very capital intensive as there can be many sunk costs and risk for your capital.
You should examine the franchisors financial statements contained in the Franchise Disclosure Documents (FDD). What you are looking for is the information on company owned unit performance.
You should also pay attention to initial fee and continuing fee. Often some franchisors have a certain formula that they use to calculate these fees.
You Are in A Growing Field.
You have chosen the right franchise if the industry you are in has lots of growth. The growth of an industry usually means there is room to make lots of profit as saturation has not come into play.
These include senior care, mental health, home services and convenience stores. These are premier franchises that have consistent growth.
Existing franchisees are happy with the brand
Before you invest in a franchise, it is important to speak to existing franchises to determine if they are happy with their decision. This one decision can give you all the information you need to make an informed decision prior to purchasing a franchise.
Prospective franchise owners should be armed with a list of questions to ask. When we work with our clients, we give them a list of questions for both the franchisee and franchisor.
The founder of Wendy’s, Dave Thomas would encourage interested franchisees to talk to existing owners. He believed that they should tell the story of Wendy’s. In the early days of the franchise system, Dave would put potential franchisees on a bus and drive them to an existing franchise in the city.
Potential franchisees would see everything from the lines, the inside of the store and all the operations.
The most important thing was that prospective franchise owners would see the success as well as the hard work.
Your Gut Says it is right
Finally, you are the one to make the ultimate decision to go ahead and invest in a business.
It makes sense to go with your gut a lot of the time. It is always good to do your research but it makes sense to use your intuition, your gut, the numbers and lifestyle you would like to have.
Which sign resonates with you?