You finally resolve to get back in shape, so you hire a personal trainer to help you achieve your goals. At your first meeting, the fitness trainer asks you a series of questions and measures you, weighs you and pinches around to determine your level of body fat. You're at the beginning of a long road. It is vital not only that you know where you're starting from, but also that you head down the right path for you.
It's a lot like the process of buying a franchise business--you cannot afford to make a mistake on such a large financial investment. Like working out at the gym, you can get hurt if you're not careful and well-informed about the process. To locate and evaluate a franchise that will be a good fit for your needs, and to do it right, you have some research and work to do. You'll also be using investigative muscles you've never used before.
Answering the Tough Questions
Focus your attention on the type of business that interests you. If you plunge into the franchise marketplace without giving some thought early on to the type of business for you, you'll be in trouble. Like walking cold into a gymnasium full of complicated, intimidating workout equipment, you won't know where to start.
Are you intrigued by a conventional retail business, or do you see yourself working from home? Do you live for food? Do you like serving the public, or do you want to sell to corporate customers? Do you want to run the business full time or part time?
Obviously, these questions must be answered in the context of your interests, your resources and your particular level of financial fitness. Assess the capital you have immediately available to you and other likely sources of funds. If you're about to sell your $100,000 baseball-card collection or liquidate your priceless stockpile of Batman paraphernalia, by all means include the proceeds in your calculations. You may want to talk to a local banker about loan programs for which you could qualify (ask about small-business loans backed by the SBA), talk to an accountant, even visit with your rich Uncle Ned. This personal self-assessment will tell you whether you should be looking at a $700,000 retail franchise or a $40,000 homebased franchise.
Working the Trade-Show Circuit
The internet will throw a lot of options and hype at you; a franchise trade show will let you try out the equipment. Most cities have one or two franchise and business opportunity trade shows in a given year. If one comes to your town, take the time to attend. A trade show is a terrific opportunity to see what the market is offering and speak with knowledgeable franchise representatives.
Let your key research begin here: Ask the right questions of the representatives. You know from your personal assessment what type of business you're seeking, how much cash you have on hand to invest and how much you qualify to borrow from a lender. So be sure to ask a few initial qualifying questions: Does the company require prospects to have a certain amount of cash on hand? What is the total investment range for the franchise? (They should know the range, since this information appears in the franchise's disclosure document, which we'll discuss later.) Are there business-experience qualifications required of prospective franchisees? If the answers to these questions pull you out of your range, don't waste your time--move on down the line. Make the effort to find the program that interests you and hits your investment sweet spot.
Plan your time at the show carefully. Expect to pick up a ton of general brochures and application forms--carrying these around for a few hours will tone your shoulder muscles. Make sure you have a full collection from any franchise booth that interests you, and leave them your complete contact information. A personal business card makes the best impression.