2.1 Research Overview (5 min)
When considering investing in a franchise, it's important to do your due diligence before signing on the dotted line. This includes thoroughly researching the company, its history, and its current operation. Look at the financial health of the franchise and its track record with current and past franchisees. Speak with current franchise owners to get a sense of their experience and any challenges they have faced. Consider the industry market conditions and projected growth. Don't be afraid to ask tough questions and negotiate for a fair deal.
The first place most people start when researching franchises is with a generic google search such as “best franchises to buy”, or “top franchises in America”. When you do this, you’ve effectively begun your franchise search.
Determining What Franchises You Should Investigate
Once you’ve decided on operating a franchise, it can be hard to choose which specific one you want to run. That is partly due to the fact there are over 790,000 franchise establishments in the US alone.
How can you know which will be the best option for you? Here are two methods to pick the perfect franchise.
Match Your Top Skills to Franchise Opportunities
Running a business takes several skills, including:
- Leadership and management
- Planning and time management
- Networking and negotiation
- Marketing and promotion
- Financial management
It’s a good idea to determine your strengths and weaknesses before figuring out what kind of franchise you could run. For instance, if you aren’t that comfortable with financial management, you might prefer options with a well-defined financial business system.
Another consideration is whether you want to franchise a smaller local business or a large global chain. A smaller business may offer fewer resources, but it’ll also be cheaper and less of an investment compared to larger restaurant chains. Once you have a general idea of what sort of business opportunity you want, you’re ready to start looking.
The International Franchise Association has a directory tool to help prospective franchisees. You’ll be able to indicate your passions, preferences for a particular territory, and budget. They’ll search their existing database to find franchise investment opportunities that are the best fit for you.
Find Out What You’re Good At
Running your own business is hard, but it will be easier if you love what you’re doing. Be honest with yourself about your skillset and passions. If you’ve never enjoyed cooking, opening a fast-food franchise might not be the best use of your money and time.
Although success is never guaranteed, it will at least be more attainable if you’re running a business you have some experience with. With so many different franchises available, you should be able to find something you’re passionate about.
In this section, you will learn how to begin your franchise research by:
- Creating a research plan
- Understanding the four areas of franchise research
- Understanding the differences between portals and brokers
- Understanding how to review FDDs online
- Learning the franchise sales process