Most franchise owners don’t typically dream of being franchise owners the day they enter the workforce. Usually, we find that they were on a defined career path and then came to the realization that they wanted to own their own business. These individuals tend to find that franchises are a great way to do that, mainly because franchises already have established business practices. This makes the transition easier for new business owners. But what most entrepreneurs struggle with is choosing which franchise to be a part of. There are so many options floating around. Maybe you’re finding yourself in this position, and that’s why you decided to read this blog. If that’s the case, we’ve got some pointers we would like to share to help you on your journey to choosing a franchise!
Know Yourself and Your Resources
Perhaps the most significant step you can take on your journey to deciding on a franchise is to know what you want out of the process and what you have available to you to make it happen. It pays off to take the time to be introspective and figure out what you’re hoping to accomplish by buying a business. There are a lot of in’s and out’s, and every franchise is different. However, here are some typical questions a franchise broker would ask that you would be wise to consider your answers for ahead of time:
- What are you hoping to get out of owning a franchise?
- How much money do you have to invest in a franchise?
- There is risk involved. How much of that are you willing to assume?
- How involved can you be in your franchise? Are you intending to work a full-time job while opening a franchise?
- What are your skill sets and your past professional experience? How do you see these playing into what you will do for the franchise?
- How important is status to you? Would you be proud to say you own this franchise?
All of these questions are important to ponder ahead of time, as they could direct you one way or another.
Narrowing Down Your Franchise Options
It can be intimidating to choose which franchise you want to go with. For many, it’s pretty easy to identify which franchises you don’t want to be part of; but when it comes to narrowing it down in your top choices, things can get tricky. It all comes down to knowing precisely what you want and what you have the resources to do.
We recommend first identifying which type of business you’d want to be part of. Do you want to be in retail? Industrial? Home-based?
Then you want to identify specific concepts within those. Do you prefer hands-on? Do you prefer services over products or vice versa? Don’t rule anything out based on emotions. Be logical about what you rule out based on your goals, skill sets and professional experience, as well as the risk you can assume. Think past your initial impressions and focus in on how it checks the other boxes.
Once you’ve compiled your initial list of top franchise options, set a deadline for yourself to follow up with each of them. Progress is key to getting this ball rolling and keeping you on track — set timelines and goals.
Doing Your Due Diligence Will Save You
Every franchisor has a Franchise Disclosure Document (FDD) that will be an excellent resource for you. The Federal Trade Commission (FTC) requires that you receive it 14 days before you sign any contract with the franchisor, which gives you time to examine it carefully and determine whether you are prepared to embark on this journey. FDD’s are typically over 100 pages, so trust us when we say you need this time and you should actually read it in its entirety. It’s lengthy, but you can’t afford to not do your due diligence by reading it.
Here are things you should be looking for in an FDD, according to the FTC:
- What is the initial franchise fee? Ongoing royalty fees? Any other fees?
- What are the rules and restrictions laid out for this franchise to ensure uniformity across franchises?
- What is the franchisors business background and experience?
- What is the franchisor’s litigation history? (Pro tip: If there is one, that’s not a good sign.)
- Is financial performance documentation available to review?
- What do you receive for what you pay? (i.e., training, marketing and advertising support, point of sale systems, ongoing support, etc.)
You can never ask too many questions of a franchisor. The more you know, the better informed you are to make a solid business decision. Along with the questions the FTC recommends, it doesn’t hurt to ask the following:
- What drives customers through the doors of the franchises?
- What is the marketing and sales strategy?
- Do you have detailed financial projections?
- Who is your competition?
- What are the failure rates for this franchise?
- Are special licenses required?
Additional Resources for Future Franchisee’s
The FTC provides a comprehensive “Consumer’s Guide to Buying a Franchise” to educate and protect America’s consumers. You can access that here.
If you love the idea of working for yourself almost as much as you love pizza, Westside Pizza may be the franchise opportunity for you. We’re looking for motivated entrepreneurs to help bring great pizza to new areas. Our franchisees are like family, and we’ll help support you every step of the way. Learn more here!
