Choose the Right Franchise Partner for a Long-Term Partnership.
This is the first in a two-part series on selecting a franchisor. This article looks at what you should be asking yourself so as to find a franchise that matches your personality and goals. The second article looks at what you should be asking the franchisor to make a final decision.
Entrepreneurs who are thinking about buying a franchise but are unsure which one may be right for them should start by bearing in mind three overriding principles:
- Look for a supportive franchisor
- Owning a franchise is a long-term commitment, so be sure to pursue a business that you have a passion for, and
- This is the time to do your research/due diligence: ask probing questions about processes, ongoing support, and detailed terms of the deal.
If you’re reading here you most likely have already made the decision to start your own new business, and that franchising could be a good option. There are franchises in almost every industry, so how do you narrow it down and ultimately decide on the best one for you?
Key questions to ask yourself when selecting a franchise
Before diving into a franchise opportunity, ask yourself specific questions about your goals, strengths, desired business area, how involved you to be in daily operations and how much money you’re willing to invest in the opportunity. If your answer to the amount of time you are willing to be involved in the daily operations is minimum, you may want to reconsider your choice as franchising prescribes you NEED to be involved as an owner-operator.
- “What are my personal goals?” Everyone has different motivations for wanting to buy a franchise: Do you want to make money, do something on your own, take an entrepreneurial leap of faith and build a legacy for your family?
- “What type of industry do I feel drawn to?” While fast food and coffee shop franchises are top of mind, the franchise business concept exists in virtually every product and service category such as courier services, education, fast food, and professional services to name a few.
- “What are my strengths?” The most successful franchise owners enter the field which best suits them but looks for ways to delegate the functions they may be less good at, such as accounting. Are you a teacher and would like your own business with an already established brand? Are you a builder and would like to rely on the marketing fund of the franchise and get working on what you know best?
- “What role do I want to play in the business?” Although there are many ‘absentee’ owners, who hire staff to manage the day-to-day business, franchising is better suited to a hands-on approach and this is generally a requirement from the franchisor. You still have to ask yourself, what do you see yourself doing on a day-to-day basis; do you want a specific job every day or a role of pure leadership of the business?
- “What is my investment budget?” Franchise costs vary according to the industry and specific business model, anything from under R100,000 to . You, therefore, need to weigh the initial investment up against the expected return, potential income, and lifestyle. A food franchise will have a much higher investment than a home-based, business-to-business franchise, simply due to the amount of equipment and inventory necessary to start the business.
- “What experience do I need?” Many franchises require only basic business know-how and entrepreneurial drive. Even in something such as a plumbing franchise, your role ought to be focused on customer service and ways to increase transactions. Bear in mind that the franchisor will provide you with training, guidance and support to effectively manage and operate the business according to their brand standards and requirements.
What to look for when choosing a franchise?
Here are some factors to consider in your decision:
- A strong support system for franchisees is one of the biggest benefits of buying into a franchise. What is necessary is that the franchisor is available to guide you with e.g., marketing.
- Look for an established brand where there should be ample support through every stage of your franchise journey since they would have all systems documented.
- The franchisor’s professionalism: take note of how they conduct their business, as an indicator of how they will handle and support you. Do they answer questions promptly and thoroughly?
- Ensure that the franchisor is clear as to what they expect of you, and that it’s a good fit for both parties and not just a case of the franchisor taking their royalty money. Do you get a sense that they see this as a long-term partnership?
- Determine the franchise’s sales approach and whether there’s sufficient available business in your designated area and whether you have enough money to implement successful marketing campaigns. Ask about their sales and advertising approaches, and whether those specific approaches work in all areas. Would the same approaches work in your area considering demographics for example?
- Be on the lookout for information on online message boards, Facebook or LinkedIn groups, or articles where franchisees talk about their experience with the franchisor. If reviews are positive and consistent for the most part, you can get a sense of the company’s business practices.
- The best way to learn about a franchise is to talk directly to current franchisees. Be sure to meet some and ask insightful questions into the franchisor’s support system, licensing fees and any exclusivity that the franchisor might offer. Franchisee’s details must be listed in the Consumer Protection Compliance Act Disclosure Document that the franchisor presents to you.
Only once you’ve done the personal introspection in the first section of this series and have done your homework outlined in the second article, then you can safely set about choosing a specific franchise.
By Eamonn Ryan