Research Tips for the Budding Franchisee
In order to find the best possible franchise for both your life and your local environment, a lot of research is necessary – you need to work out whether or not the franchise is offering something which is desired by the local market, and whether or not you yourself have the requisite amount of skills and money to run the franchise. Some of these things you find out when the time arrives, but you should research and plan to the fullest extent – remember that people who fail to plan, plan to fail. There are many sources of information which you, as a potential franchisee, can take advantage of – from information which is provided by the franchisor companies by law, to information that you can get from the government and on the World Wide Web. A review of the appropriate sources will help you to ensure that the franchise you choose is one that is ready to take on the market!
The first thing that you need to think about is what particular type of franchise you are interested in running. You probably already have some idea what kind of business would be best for your first franchise based on the skills and experience that you already have. For example, people who have worked in restaurants in the past, often decide that they will go into the restaurant business as the owner and manager of their own franchise restaurant. This gives them the business assistance, marketing assistance and the advantage of a familiar name making it much easier for them to handle their first entry into the business arena.
Knowing what kind of company you want to run, you can then research the kinds of specific franchise companies which are most successful within your area of interest. When you have a list of franchise companies that you might be interested in, apply to them for information – they will generally send you information brochures on how to apply for a franchise agreement and what kind of experience you can expect running one of their stores. You can also get a sense of the numbers – the kinds of profits you may realise, although this may be an early estimate based on the average experience of people countrywide. Everyone has a different experience running their franchise, but you will be able to take advantage of the franchise company’s data and their experience marketing the brand and managing the stores.
You should continue to research the companies that you are interested in at the library and on the World Wide Web to find all the latest articles about the state of the parent company, whether it is making or losing money at this point, whether it is mostly opening or closing stores, and so on. If there have been recent legal problems involving the company, problems which have led to lawsuits, bankruptcies or any other kinds of problems, then you may want to keep that in mind as you consider entering into business with them. Remember that if there is court cases involving the company that you are thinking about you can always get copies of the relevant legal files by contacting the courts and judges involved.
The franchise agreement that you receive should then contain various standard provisions – usually there will be stipulations on the specific way that you can run the business – the franchise company will be able to more or less dictate the location of the new business, and the agreement that you make with the franchise company may even be directly tied to a specific lease. The other side to this equation is that you will be taking advantage of the experience of the franchisor company in finding the best possible location. The reason that the franchise company demands certain requirements is that it wants the business to succeed and therefore wants to take advantage of the results of extensive research it has done into what kinds of locations are best suited to new businesses of its type.
You should take your time looking over the franchise agreement. Investigate the profit projections that the franchise company has put together for the area, list all the costs the franchise company thinks that you will have to be prepared for, and see if there is any way for you to save money on the lease agreement – the one part of starting a franchise that most people who start doing business wish that they had gone back and spent more time working on. The lease is a fixed cost that stays with you as the business goes on and any discounts that you are able to arrange at this stage will result in long term savings! If you have to make repairs on a location or if anything that you are doing in terms of renovations will increase its value then you should be able to negotiate a lower lease price as a result.
In addition to all of the research that you have done up to this point, you should also schedule meetings if you can with local franchise business owners – most of the time you will be able to ask the people who own a local franchise business about the experiences they had, and they will be more than happy to provide you with some general figures on what they think the local market will provide for a new franchise business. It may be hard for you to get specific numbers on how the businesses of the people you are interviewing have done – after all, they are likely to see you as a potential competitor in the future if you are successful! However, you can make inquiries on general statements such as whether or not you think that a typical business can make a certain amount of money in the local area over a given period.
Also, if you have a spouse then a critical part of your research will be talking with your significant other so that both of you are comfortable with the amount of time and effort that it will take to form a successful business. If the business succeeds, how will that change the conditions of your life together? You need to think about the personal aspect that running the business will have on your relationship and on your life – whether or not you will want to put in all of that effort over the first couple of months, and whether or not you will want to continue working on the business in the future months if it is successful.
While there are many challenges that you will face as the owner of your own business, the rewards from owning your own franchise business are many. As long as you have done enough research on your franchise business you will be able to enjoy the benefits while avoiding most of the problems that can crop up. With enough money and a good sense of the issues that can arise and how to deal with them, your chances of success will be greatly enhanced. Good luck finding the best possible franchise for you and for your area and I hope that you are able to do all of the research that it takes to run a franchise business successfully in today’s market!