What Challenges does an Aspiring Franchisee Face in Choosing the Right Franchise?
Attending the annual Franchise Leadership Summit 2017, held on November 16th, was one delegate at least looking for information on how to find the right franchise to suit his particular needs. The conference covers a lot of ground, but does not really assist in that type of decision. This article does.
In talking to him it became evident that what was uppermost in his mind was less the specifics of any franchise but rather whether he could match his own lifestyle needs with a particular franchise. He was already a successful businessman with a career which had taken him to many family-unfriendly parts of the world for extended periods of time – locations like Libya and Syria. He had a family and, despite having attained some wealth, regretted having missed virtually the entirety of his children’s formative years. In short, he now wanted a nine-to-five, preferably working from home or not far from it. Oh, and he wanted to be his own boss.
His lifestyle challenges may differ from most other people – but they highlight the fact that everyone has unique issues which they need to satisfy when selecting a franchise. Therefore, the search for a franchise has to start with an honest look at oneself.
How to start the process
The following are ten steps to selecting an appropriate franchise, especially in the current market conditions expected for 2018.
Step 1: Self-Evaluation
Evaluate for yourself:
Once you’ve clarified what is important to you, you’ll find it easier to evaluate various franchise opportunities and to determine which is your best match.
Step 2: Financing
You’ll need to have a clear idea of how much money is available to you. These are tough times and unless you’re sitting on a wad of cash, look at financing options early on. There are various articles on our website which deal with this issue.
Step 3: Study industry categories
Don’t initially bother with individual companies, but rather focus on broader industry sectors. You can get some idea of these from the Franchise Association of South Africa (FASA)’s 2017 annual survey, which is covered on this website, and ask yourself which of these most meet the desired criteria you identified in Step 1. If any doesn’t, cross it off and you’ll end up with a list of potential industry sectors.
Step 4: Look for recession-proof sectors
With your list of possible industry segments that may meet your lifestyle requirements, ask yourself a simple question: “Is this a business that could continue to be profitable irrespective of the state of the economy”, industries such as fast food, maintenance, senior care or hair cutting?
Step 5: Start evaluating individual franchise companies
Having narrowed down your list, now start looking at individual franchise companies. Pick a selection and look at them in more detail on their websites, particularly if they have openings in your desired area or on whichfranchise.
Step 6: Reach out to franchisors
Having selected a few companies that so far tick all your boxes, and checked out their websites, contact them to request more detailed franchise information via brochures, webcasts or other materials. Decide if the company still meets yo
ur criteria and is worth spending more energy on. Be selective, because from this moment on, your time commitment on each is going to increase considerably.
Step 7: Study their mandatory disclosure documents
If you are genuinely interested in one, complete its qualification questionnaire and study its franchisor disclosure documents. These contain extensive information about the franchise, and should include:
Review the documents carefully and get any questions answered before proceeding to the next step.
Step 8: Contact existing franchisees
Existing franchisees are the best source of information for any franchise system. Get a list (this should be in the disclosure document), contact some and probe into their business, their lives as franchisees, and what they think of the company. In particular, find out
Step 9: Visit the franchisor’s offices
If you haven’t already done so in any of the prior steps, your next step is to visit the franchisor head office. Prepare for this well by composing any final questions you want answered, and request to meet the people who will assist you to get your business up and running. Make sure you are completely comfortable with its management and confident in the company you are about to enter into business with. Remember, this is a two-way process as the company will also be evaluating you as a potential franchisee, so be presentable and open.
Step 10: It’s time to make your final decision
If you’ve followed the above process, you should by now have certainty that this franchise opportunity does all of the following: