These are the important ways you need to do before buying a franchise. Based on a book, ‘Start Your Own Business’, so many franchise systems can be dizzying. So we can start by investigating various industry that interest you. Narrow the options down to a few industry you are most interested in, then analyze your area to see whether there is a market for that type of industry. If so, contact all franchise company and ask them for information. Any reputable company will send you information for free.
Of course do not rely solely on those promotional materials to make a decision. Visit your library, search with internet, to look up all articles you can find about the company you are considering. Ask your franchise regulators in your area to see whether there are any ‘not too good reputation’ with the company.
Then, choose a sample randomly of existing franchisees to be interviewed. Visit their location. Then interviewing them to get reliable information such as the profit they could actually generate, what their typical day is like, whether they enjoy the business, and whether the business is challenging enough.
Most will be relatively reveal their earning and their satisfaction with the franchisor, however, the key to get all information you need before buying is asking the right questions. These are some ideas to start:
- Was the training given by the franchisor helpful in running the business?
- When you need help, how responsive are the franchisor?
- Tell your typical day.
- Have there been problems you didn’t expected?
- Based on your experience, are the investment & cost information they gave in their promotional material was true and realistic?
- Have the profits matched with your projection?
- Will you take this investment again?
- Are there broader opportunities for special franchise ownership in this system?
Running a franchise will need an ongoing relationship with your franchisor, so make sure you get detail on overall process that happened from the agreement signing until the end of first year in business. Did the company follow through on its promise?
Talking to as many franchisees as you can, will give you a broader perspective and more accurate picture of company. It can also bring you back to the reality about the daily business execution. It’s one of the most important things in franchise selection process.