6 Questions to Ask Before You Begin Your Franchise Search When exploring franchises to buy, there are some crucial factors you should consider.
Starting a business from scratch can be daunting, and many people don't know where to start. That's why some aspiring entrepreneurs choose to invest in a franchise — but that's not to say the decision is easy. Not all franchises are created equal, so it's important to do your due diligence when exploring franchise opportunities. Not sure where to start? Begin by asking yourself these six questions.
1. Do my personal goals and skills align with the franchises on my shortlist?
Having an honest conversation with yourself can narrow down your search to the franchise that best aligns with your objectives. Ask yourself questions like: Do my aspirations and interests align? What do I want to achieve through business ownership? Am I looking for financial gains, a better work-life balance, or the satisfaction of running my own business? Do I enjoy the industry that the franchise is in? You want your hopes and abilities to match up with the values of the franchise.
2. Is there a need for a certain business in my area?
When considering franchise ownership, you want to steer clear of markets that are oversaturated. It's also smart to conduct market research to ensure there's an interest in the type of franchise you're thinking of opening. For example, if you want to open a fitness franchise but your city already has several cycling and Pilates studios within a 10-mile radius, you might consider opening a location in a neighboring town or looking at other workout concepts.
3. What is the franchise's reputation?
Look for franchises that have a positive reputation in their industry and a history of success. Online reviews and ratings are a good place to start. You can also talk to current and former franchisees to learn about their personal experiences with the franchisor's support, training, and overall business model. A reputable franchise will be transparent about its financials, marketing strategies, and expectations for potential franchisees.
4. What are the investment costs?
Investing in a franchise typically requires a significant amount of capital, and it's important to have a good grasp of the total costs as well as the potential return on investment (ROI). The upfront investment will include the initial franchise fee, ongoing royalties, advertising fees, brick-and-mortar costs, and other expenses. Reputable franchises will offer a detailed breakdown of their investment costs and fees plus a realistic projection of your ROI. Be wary of franchises that make unrealistic promises, downplay risks, or are not forthcoming about their fees.
5. Can I count on the support and training?
One of the biggest advantages of becoming a franchisee is the ongoing support and training provided by the franchisor. Look for franchises that offer initial comprehensive training programs and continuous support for operations, marketing, and management, be it with detailed manuals or on-call teams for answering questions. After all, this might be your first business venture — which means you'll likely need some help navigating the experience.
Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.
6. Have I reviewed the franchise agreement?
Before officially signing with a franchise, you should carefully review the franchise agreement. It's a legal document that details the rights and responsibilities of both the franchisor and the franchisee. It's critical to understand the terms and conditions, as there might be clauses that dictate the level of control you will have, the duration of the agreement, the fees involved, and restrictions on your ability to sell or transfer the franchise. It's advised to consult with a lawyer or other professional to ensure you fully understand all aspects of the document. After all, your future success or failure could be right there in the fine print.