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Things to Look for in a Franchise

A great way to become a business owner is to buy a franchise.  However, buying a franchise is a major purchase.  Your decision should be based on the factors that really matter, with you and your family.  According to Scott Greenberg, author of The Wealthy Franchisee: Game-Changing Steps to Becoming a Thriving Franchise Superstar, here are some things to look for when considering to buy a franchise.

Culture of the Company

This aspect of a franchise is not so easy to measure, but can certainly be felt.  Find out how well people get along.  Is there a clear mission beyond making money?  If so, how is this mission communicated and operated within the system?  Look for brands with happy franchisees, who work well with each other and praise their franchisor.

Growth Track Record

A franchise must be more than successful; it must also be repeatable, in order to be a strong opportunity.  “Ground floor opportunity” is a positive way of saying they have not proven the concept and most of their learning still likely lies ahead.  A franchise that has several open locations showing positive growth in different markets is a much better opportunity.  Reports about what has happened are much more useful than projections about what might happen.  The whole point in buying a franchise is to avoid being their guinea pig.

Profitability

Whether you are profitable or not, most franchisors collect a percentage of your gross sales.  Even so, the best brands still concern themselves with your financial well-being.  While expansion is key to making big money with most franchises, a single unit should produce a decent return on investment.  Ask detailed questions about franchisee profits to make sure you will have money to take home.

Validation Calls

This is your opportunity to talk with existing franchisees about their experience with the brand.  Franchisors will probably give you some names to call, most likely the ones whom are satisfied.  Try to connect with a few other franchisees to get a wider perspective.  Ask questions that will help you understand the inner-workings of the brand.  You might also ask about what has worked and what has not worked for them.  Don’t rely too much on any one source; talk to as many franchisees as possible.

Market Resilience

Consider how dependent the concept is on conditions that are out of your control.  While something as extraordinary as a pandemic is hard to foresee, it’s reasonable to expect that over a 10-year franchise agreement, you will face changing economics and markets.  Some franchise concepts are more vulnerable to these types of changes than others.  No business will thrive in all conditions, however hopefully you can find a good one that will be profitable in most situations.

Whatever you decide to do, your search should start within yourself.  Putting money aside, rule out concepts that don’t get you excited, make you proud or provide the kind of lifestyle you want.  You’ll be a better business owner if you enjoy what you are doing.

Click here to read the full Entrepreneur article about what you really need to look for when considering a franchise.  .

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