The 9 Steps of Successful Franchise Research
I talk to a lot of people who know that they want to go into business for themselves. They know that they want a franchise but, they don’t know which one. So how do you go about researching a franchise to find out which one is right for you?
The first thing you need to do is to have a plan. I used to do quite a bit of scuba diving. We said that safe divers plan their dives and dive their plans. The same thing is true in safe franchise investing. Plan your research and act accordingly when you are done.
Your research should follow a step-by-step approach like this one:
1). Using the web, referrals, and any other means, look at the types of franchises that you might be interested in.
2). Contact the franchise.
3). Talk to franchise sales people and find out what they have to say. Remember that they are sales people and they only get paid if you buy a franchise. However, they will have a lot of information as it is their job to help people understand the business. It is also their job to disqualify people who they don’t think will be a good fit.
4). Get their information profile and fill it out. Go ahead and do this. During this time you are getting to know their processes and they are getting to know you. The more work you do with them the better, even if it seems menial or trivial.
5). Get the Franchise Disclosure Document. This is that inch-thick book that all franchisors are required to have. Read this cover to cover. The second half of the FDD will have the contract that you will eventually sign if you become a franchisee. Have an attorney review it as well, but don’t have them review until after step 7 below. Attorneys are expensive and save your money until you are at a point where you really need their advice.
6). Validation Calls are the next thing on your list. This is when you call the existing franchisees. After having done the things above you will now have enough information to be able to have intelligent conversations with the franchisees.
7). Make a Pro-Forma. This is a profit and loss statement that will help you understand what levels of sales and expenses you will need to make your business profitable.
8). Discovery Day. This is where you meet with the franchisor themselves. This should be one of the last things on your list and it is also my advice not to sign a contract or write a check at Discovery Day. This should not be done while you are there and excited but, after you have had a week or two to reflect on your research.
9). Set a Decision day. When you leave discovery day, set a decision day for yourself. This will help you get any remaining questions answered and push yourself for a timeline to finish and get on with your life whether you are joining that particular franchise or not.
People who follow these types of research processes are not only likely to find a good franchise that is a good fit, but they are likely to become successful franchisees as well.
Global Garage Flooring & Design, CEO