Selecting the Right Franchise

How do you select the business franchise that fits your needs, skills and desires best, while also making sure you're joining a top-notch organization? There are some steps to take to begin the weeding-out process. So put on your inspector's hat and begin formulating a game plan.

First of all, think about the work environment you are interested in, and the requirements that running businesses in various industries will have. For example, do you like working late (and long) hours, hiring and managing employees, and dealing with the public? If so, you could consider the food service industry. Think long and hard about what "fits" your lifestyle. Involve your family and any friends or associates you may want to pull into the business. Write down your objectives. Sometimes, just the act of writing things down helps you more clearly identify what you really want.

Once you have identified the general category of business you want enter into, visit some of the franchising Web sites. On most of these sites, you can search for franchises based on investment levels, type of business, and sometimes geographic region. Some even give you estimated breakdowns of what your total investments will be, as well as the ongoing royalty and advertising payments. You can also use a franchising consultant to help narrow down your choices.

When you get a list put together, begin contacting the franchisors for additional information. One thing to keep in mind throughout this process is that while you're shopping for a franchise, those franchises are also out there shopping for franchisees. You'll be interrogated as much as you interrogate them. You both have to agree that it's a good match in order to proceed.

The franchisor will send you brochures and other materials, and most likely request that you complete a questionnaire. You will proceed based on the outcome of that exchange of information.

The next step will be your evaluation of the company's Uniform Franchise Offering Circular (UFOC). The Federal Trade Commission (FTC) requires this document be provided to disclose detailed information about the franchisor at least 10 days prior to any franchise purchase. That information includes:

The franchisor, its predecessors and its affiliates

Business experience/history

Litigation

Bankruptcy

Initial franchise fee

Other fees

Initial investment

Restrictions on sources of products and services

Franchisee's obligations

Financing

Franchisor's obligations

Territory

Trademarks

Patents, copyrights and proprietary information

Obligation to participate in the actual operation of the franchise business

Restrictions on what the franchisee may sell

Renewal, termination, transfer and dispute resolution

Public figures

Earnings claims

List of outlets

Financial statements

Contracts

Receipts

Visit as many of the franchisor's existing franchisees as you can. Meet directly with the owner of each establishment, and pay close attention to opinions of the franchisor. Ask the owners about the support they get on an ongoing basis, as well as the training and assistance they received when they first purchased the franchise. Did the franchisor help them with the location decision, and assist with initial set-up? What about the promotional efforts of the franchisor? Does the individual franchisees benefit from their investment? Do they get any say in how the advertising dollars are spent or allocated? Are their earnings living up to their expectations? Did their total investment stay in line with what they were expecting?

Ask specifically if they would do it again knowing what they know now. These opinions are very important to your research into each franchise. Look for trends that might indicate overall dissatisfaction with the company -- and avoid those like the plague!

Review the franchisor's business plan, operations manuals, and market analysis. Try to meet with the franchisor in person. Make a point to meet the franchising operations personnel with whom you will be dealing. Keep these questions in mind while you are meeting with them:

Is the information you are given clear?

Does the training program appear to be thorough?

Does it match what you were told by their existing franchisees?

Does the market look strong?

Are there too many existing franchised locations in your area? If the area is already saturated, you may need to look elsewhere (either in location or business).

Are there no locations in your area? This may not necessarily be a good thing either. It may mean that the competition has a strong hold on that regional market and you'll have a difficult time getting a share of it.

Take careful notes about each franchise opportunity you are investigating. Make sure you understand all of their policies and have a good feel for the level of satisfaction their existing franchisees have. Then use this information to make your final decision.

(by Lee Ann Obringer)

// http://money.howstuffworks.com/franchising.htm)

Tasks to the text “Franchising”

Date: 2015-12-18; view: 683