Recently, Forbes.com published an article titled, The Franchise Dating Game: Finding Your Perfect Franchise Match. The article analogizes the process of choosing a franchise to that of finding “your perfect life partner,” and it discusses six steps that prospective franchisees can take to narrow down their options until they find the “right” franchise opportunity.
We have discussed these steps before in various articles covering the topic of due diligence. But, it is interesting to examine them in the “dating game” context; and, as due diligence is one of the most-important steps involved in buying a franchise, we thought we would share our thoughts on these tips for finding “The One”:
1. “Know Your Personal Interests, Strengths and Goals”
This is a critical factor in choosing a franchise opportunity. Even if a franchise appears to have significant profit potential generally, if you are not interested in the nature of the business, and if you are not passionate about the product or service you would have to sell, then it is probably not the franchise for you.
2. “Know Your Figures”
Different types of franchises require different levels of financial investment; and, even among competing franchised brands, some franchisors demand higher initial franchise fees, royalties, and marketing fund contributions than others. While these higher costs may (or may not) be justified, overextending yourself financially can limit your ability to survive the initial months of operation when your franchise isn’t generating a profit.
3. “Get Online”
These days, there is no shortage of information available on the Internet. Check out the franchisor’s website and social media pages and see what current and former franchisees are saying online. Check out franchise review websites too, but just be wary that some may be basing their “recommendations” on the fees franchisors pay for advertising.
4. “Go on a Date”
If you are serious about buying a franchise, the next major step is to meet with the franchisor’s representatives in person. You can do this at a regional or national franchise expo, or you can go ahead and arrange a visit the franchisor’s headquarters. In either case, you should come prepared with questions, and you should be aware that the people you meet with will be actively trying to sell you on their franchise opportunity.
5. “Meet the Family”
In addition to reading online forums and meeting with the franchisor, it is a good idea to speak with some of the brand’s existing and former franchisees as well. What do they like? What don’t they like? If given the opportunity for a “do-over,” would they buy their franchise again?
6. “Keep a Cool Head”
It is easy to get caught up in the branding and potential that come with buying a franchise; but, ultimately, you need to make a decision based on practicalities rather than emotion. Once the due diligence process is complete, take the time to review what you have learned, and make a reasoned decision based upon what you believe you can realistically expect as a franchisee.
Discuss Your Franchise Opportunity With Franchisee Lawyer Jeffrey M. Goldstein
Jeffrey M. Goldstein is a national franchisee lawyer who represents prospective franchise buyers in due diligence and franchise agreement negotiations. To inquire about our firm’s fixed-fee franchise business reviews, please call 202-293-3947 or contact us online today.
