updated - June 19, 2021 Saturday EDT
In simple terms, a franchise is whereby an entrepreneur (a franchisee) purchases a business unit from a franchisor and enters into a contractual relationship, and agrees to follow an already established operating procedure. The franchisee pays a royalty and an initial fee to operate his business under the franchisor's name and system.
When you buy into a successful franchise, the risk of business failure will be minimal. On the contrary, if a franchisee invests in a marginal company, it may take years before a return on their investment is realized. It is advisable to do a thorough research of the intended company to know the type and state of a franchise.
Below are some of the resources that can guide you through the process of searching for a franchise.
Franchise Trade and Industry Shows
Attending franchise trade seminars is a great way to learn new things and gather information before you settle down to buy. Some of the topics covered are industry trends, contract provisions, franchise programs, financing, and risk factors, among others. All are worth attending.
In addition, franchise trade shows allow you to meet and speak to other franchisers who have a wealth of information and have first-hand experience in the specific field you are targeting.
International Franchise Association
International Franchise Association is a site that has everything that you would look for in a franchise business. IFA is an association that oversees all types of franchises. It provides information on how to run a franchise and gives tips on franchise opportunities in the U.S. and abroad.
In addition, it offers information on industries associated with a franchise like finance, insurance, veterans programs, and minority programs. It also has a detailed guide on the processes of buying a franchise.
There is a lot of information on online platforms like FranchiseOpportunies.com. It is one of the largest online franchise opportunity directories. You can find valuable updated information about a specific franchise business. The site's search tools also make it easier to browse by industry, state, or investment level.
Targeted Franchise Company
A great source of information is the franchise company of interest itself. It should be able to provide you with important information like franchise disclosure documents, brochures, promotional documents, and helpful general information about the industry.
The business's salesperson should take you through the various processes like going through qualifying questions, filling the required fields, and the evaluation process. Take advantage and ask relevant questions which will help you to make a sound decision.
Franchise consultants can also be very helpful in shedding more light when deciding on the type of franchise to settle on. Since the brokers have experience with different franchise concepts, they are better positioned to help you narrow down to a concept that you are better suited for.
A point to note, even though the broker is trained to help the franchisee make the best decision, you should make sure that you do not only rely on their advice only. The broker gets a commission from the franchise company if he is successful in making a sale. Do your research extensively until you are comfortable with your decision.
As you research more on whether to buy a franchise, you need to understand how the business operates physically. You can visit a local company that is in the same general segment you are considering joining. Get a feel of how they operate and what their daily routine is like. Where applicable, you can ask to volunteer and join other staffs who have been working in the business for some time. You would be surprised by the value of the information that you would gather about the neighborhood, local demographics, and existing job market vs local unemployment rates.
Apart from visiting the targeted franchise company, it would be important to find out who their competitors are. Visit them too. Learn how they operate, their pricing structure, how long they have been in operation and any other relevant information you would like to find out.
Some business types succeed in franchising more than others. They include restaurants, hotels, resorts, gyms, auto rental companies, custom event signage companies, and cleaning companies are some of the businesses that have made it big in the franchise industry.
In any kind of business, one has to take a risk. But when you have done a thorough research and taken all the necessary steps, the chances of failing are minimal to none. And to add to that, research done by the International Franchise Association, projects that franchising is set to open more than 26,000 locations, add nearly 800,000 new jobs, and contribute 447billion to the U.S. GDP. In 2021 Overall franchising contribution to the economy is forecast to grow by 7%.
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