Few events hold as much potential for the would-be business owner as a franchise trade show. Innovative business systems and ideas are presented in an exciting, festive setting.
But buying a franchise can be intimidating, especially in the dazzling atmosphere of a show packed with thousands of people. To get the most out of this gathering, you must know what to expect and take the time to prepare.
Step 1: Find a good trade show. Watch for ads in the business section of your local newspaper, or check business publications at the public library. Large shows drawing a wide sampling of legitimate franchisors, such as Entrepreneur Magazine's Small Business Expos, are typically held only in major metropolitan areas.
Step 2: Decide what you are shopping for. Know what types of businesses interest you before you go. Do you love cars and want an auto-related business? Do you enjoy customer contact and dream of a retail store, restaurant or similar business that requires face-to-face interaction?
What is your financial situation? Do you have the money and credit to start a retail shop, or are you looking for a low-cost investment such as a homebased business? Decide these things now, and once at the show, you can concentrate on franchises that fit your criteria.
Step 3: Plan your attack. After you arrive and register at the show, sit down and take a few minutes to examine the list of exhibitors. Mark the companies that interest you; as you stop by their booths, check them off to make sure you haven't missed anything.
Many franchise shows also hold seminars such as "How to Buy a Franchise" and "Financing Your Franchise." Schedule time to attend the ones that sound useful. This may be the most valuable part of the show.
Step 4: Cover ground quickly. Talking too long with exhibitors can eat up all your time. To avoid wasting time with exhibitors whose programs are inappropriate or too expensive for you, prepare a list of "knock-out" questions to eliminate those companies quickly. If you have limited cash, for example, asking about the size of the investment or the financial qualifications will eliminate franchises you can't afford.
Remember, a franchise trade show is designed for initial contact only, so don't expect to have any in-depth discussions. Leave your business card with franchisors so they can send you more information.
Step 5: Ask the right questions. Aside from your knock-out questions, other areas to cover include:
- What are your growth plans for the next three years? This gives you an idea of the franchisor's commitment to expansion. If you get a vague answer or a bombastic statement suggesting the company expects to take over the world, be forewarned.
- What does your training program involve? How long is it and where-in the field or at headquarters? What does it cover? Solid training is the mark of a good franchisor.
- What industry organizations do you belong to? Use this information to investigate the franchise company's track record.
- One controversial question to avoid: How much money can I expect to make with your business? Franchisors can't pinpoint this; there are too many variables involved. They do, however, know how existing franchisees have fared, and some companies will give you this information if you ask for it.
Step 6. Follow up on the follow-up. Expect a follow-up call or visit from franchise companies you showed serious interest in. This is your chance to explore the investment in-depth; ask every question that occurs to you. The franchisor will also provide written information, such as marketing materials and the Uniform Franchise Offering Circular (UFOC), a disclosure document that tells you much of what you need to know.
Be thorough and skeptical in evaluating the information the franchisor provides. Don't just rely on the franchisor's statements; seek out other franchise owners and watch them in operation. Talk to them, too. Are they happy with the business and the franchisor? Was the training useful? Did they make a satisfactory living from the business last year? Would they make the same investment knowing what they know now? The questions are endless, but other owners can provide the best evaluation of the investment you will find anywhere.
Step 7. Get professional advice. Finally, get professional help from a lawyer and an accountant in reviewing the investment, the UFOC, the contracts and other paperwork involved. Remember, no matter how many frachise companies assure you theirs is a simple business, a franchise investment is extremely complex. A penny spent here is a pound saved later.