My wife and I are in the process of looking for a school for my 4 year old daughter to attend next year. This is Kindergarten. A very important time in any child’s life, and a foundational moment to help cement her love for learning into the future. Needless to say, we are not taking this lightly. Phone calls to friends and relatives, visits to different schools, and real reflection on our daughter’s personality and what setting might be best for her all play a role into this decision. While this may be overkill to some, we wouldn’t make an important decision any other way. You shouldn’t either when buying a franchise.
Buying any business is a foundational moment, an important moment, and one not to be taken lightly. According to the Internatioanal Franchise Association, franchise businesses will continue to grow at a faster rate than non-franchised businesses in terms of job creation, new business formation, economic output and GDP contribution. This is great news for the franchise world, and all the more reason for potential buyers to wise up and make sure they are making informed and thoroughly vetted decisions. According to the statistics, the number of franchise businesses in the US will increase from 747,359 to 757,438; the number of jobs in franchising will increase by almost 2%; and the dollars output of franchise establishments will increase from $769 billion to $802 billion.
But increased outputs are only good long term if the people buying the franchises can make and sustain success. The best way to help ensure this is to be prepared.
Below are 5 steps that if followed will help get you started the right way. There are no shortcuts to proper preparation. It takes time, planning, follow through and an open mind. Know this going in, follow the steps below, and you will be certainly off to the right start!
1. Take the time to identify your interests. This will help you limit your search to businesses that you are actually interested in. It makes no sense to buy a business that you don’t have an interest in.
2. Research the right way! You can start with the internet, but be wary. There is a lot of crap on the internet that is simply not true, especially regarding franchising. Ask around to people you know who own a franchise, or seek people out who have experienced franchising.
3. Narrow your search to 10 or less. Too many options can lead to too much confusion. If you have followed steps one and two above, you should not have more than 10 options that you are seriously considering.
4. Organize your list of 10 or less starting from the ones you are most interested in down to the ones you are least interested in. And then do this:
- Call/email/text/communicate with everyone you know in or around that franchise and ask questions. How do they like the franchise? If they could re-write history, would they buy it again? What are the good things? Bad things? Is it profitable? How long did it take to be profitable? Is the franchisor supportive? Is the franchisor organized? Does the system work? What are the kinks, if any, in the system? Does the franchisor value franchisee input? What was the total franchise investment?
- Get as much documentation on the franchise as you can. Reach out to the franchisor and ask for the Franchise Disclosure Documents and accompanying packet of information.
- Spend the time to review all of the information and ask questions if you don’t understand.
5. Hire experienced professionals to help you! Franchise consultants are everywhere, just be sure to understand their motivations as well. For instance, free franchise consultants are free to you because franchisors are paying them to recommend their systems. There are however independent consultants that do charge, but may be more objective in their suggestions. And ALWAYS consult with professionals along the way. Five professionals you must speak to: Accountant, franchise attorney, banker, insurance professional, and financial adviser.
The steps above should surely get you going in the right direction. For a thorough overview of how to get started the RIGHT WAY, click here!.
So tell me, what have you done to ensure that you buy a franchise……the right way?