Are you thinking about buying a franchise? Wise decision; even the Starbucks stats indicate a high rate of return. The average Starbucks franchisee earns $120,000 per year with a single location.
If you own 20 locations, that would most likely be $2.4 million. However, picking the wrong franchise can leave you without guidance or profit. Continue reading to learn how to choose a franchise.
Research Franchise Opportunities.
Before you begin your online search, narrow down the field. This will help you determine the company and investment range. You can also enlist the help of a certified franchise broker.
Most brokers are compensated by the franchisor. They can assist you with finance and location selection. If you work with a broker, they should help with the whole discovery process.
Make the First Contact
Examine the franchisor’s response to your questions. If you are sent to voicemail, keep track of the time it takes for them to answer your call. Here are some factors to consider:
- Did they answer the phone enthusiastically and professionally?
- Were you able to speak with someone in the sales department?
- Did they address all of your concerns?
- Did they have any personal information?
- On a scale of 1 to 10 (ten being the best), how would you rate them?
Don’t be afraid to speak with various people involved in the company to get a sense of their corporate cultures. Keep an eye on how the first contact with the franchisors goes.
Understand the Procedures
When contacting the business, ask about their franchise marketing tips. Get an overview of their sales and qualification procedures. This will assist you in remaining on track and ensuring development.
Be suspicious of businesses that don’t have any processes and experience in place. After all, a franchise opportunity should have a system in place. They should also have a robust marketing strategy.
Conduct a Review of the Franchise Paperwork
Consult your attorney once you’ve received the franchisor’s franchise disclosure document (FDD). Don’t just settle for a typical business attorney.
They have little to no knowledge of franchising and may cost you more money and time. You want to look for a franchise attorney with over years of experience in the business.
Conduct Interviews With Current Franchisees
The FDD must contain a list of franchisees. If it is absent, the document is incomplete. Contact the franchisees to ascertain their status. Inquire about the advantages and disadvantages they’ve found regarding the franchise.
Participate in Discovery Day
Most franchisors have frequent discovery or decision-making days. This event lets you visit their headquarters and meet their employees. These gatherings provide an opportunity for both parties to assess for potential partnership.
Ask them for advice on how to market a franchise. You want to know more about their marketing strategies and how to grow your franchise. Keep in mind that they are also analyzing whether or not you are a good fit for their business.
Put the Franchise Agreement Into Effect
The last step is to execute the franchise agreement and any accompanying paperwork. Make a note of the papers in your file for future reference.
Learn More About Buying a Franchise
A franchise enables franchisees to operate a company under an existing brand name. This reduces the risk and increases the odds of success for new business owners.
The best franchise investment depends on the buyer’s criteria and goals. They will also need to research various franchises and make comparisons. This can be a challenging endeavor, so check out our posts for more info on buying a franchise.