One of the initial surprises for prospective franchisees is often the large number and great diversity of franchisors. Franchising doesn't just take place in the quick-service restaurant business-many other industries also use franchising as a means of expansion. Some franchises require an investment of well over $1 million, while others require an investment that's probably less than the credit limit on your charge card. Many want you to find a piece of land and build your location, but you'll also find opportunities that can be operated out of vans. With some opportunities, all you may need to get started are a desk and a computer in the basement of your home.
The history of the operation also varies from concept to concept. While most are based on long-standing consumer demands or trends, others, like e-commerce offerings, are in industries that didn't exist 10 years ago. You'll even find franchises taking advantage of the latest fads.
Where should you begin when selecting the franchise that's right for you? By determining where not to begin. Avoid the inclination to hire a franchise brokerage firm. They may actually limit your opportunities and create a feeling that you have to hurry and make a decision. And here's why.
The services of most franchise brokerages are free to prospective franchisees. The reason they can offer "free" services is their fees are paid by the franchisors that hire them to sell franchises. The fees they charge franchisors are usually a percentage of the initial franchise fee you'll pay and, in some situations, a portion of your future royalty payments.
A broker's job is to sell you a franchise. The small percentage of franchisors they have for clients limit your selection pool. There are good and competent brokers out there, but because their primary focus is to help you buy a franchise from one of their clients (and earn themselves a fee), they may pressure you to buy before you can fully explore all the franchise opportunities available. So do the legwork yourself-it'll take some time, but it's not hard. When you need advice, hire a franchise attorney, accountant, consultant or other experienced advisor who will work for you.