Franchising 101
The Process of
Selecting Your Franchise
Investing in your own business can be one of the most critical
decisions you will ever make. The challenges are huge, physically
and emotionally. There are so many franchises to consider. How can
you choose which one may be the best for you?
You
- In order to help you fulfill your goals and
dreams, we need to learn a lot more about you. We need to learn how
you feel about certain aspects of business and life in general. We
want to know your hobbies, likes and dislikes. We need to know if
you prefer to work from home, an office or outdoors. Most important,
we need to know information on your current financial condition so
we can focus on those franchises where you will have the best
opportunities.
Matchmaking – We will massage the information you
provide and compare it to requirements provided by many of America’s
franchise companies. We will initially cut the number of
franchisors down to two but no more than three and present them to
you with reasons why we selected them. We will arrange for these
franchisors to send you information and contact you to discuss their
opportunities and answer your initial questions. The information
provided will typically include a Uniform Franchise Offering
Circular (UFOC). It may sound a bit ominous, but it is in your best
interest. This document contains detailed information on the
franchise, including a copy of the actual franchise agreement you
would sign, company financials for the past three years, a directory
of current franchisees and those who recently left the system. You
may want an attorney to review the UFOC or the franchise agreement.
It is important that you have the documents reviewed by a franchise
attorney in order to avoid excessive legal expenses. We can help you
identify an attorney who will help you through the process.
Evaluation – In considering a franchise, you will
have a unique opportunity to contact other franchisees and ask them
specific questions about their businesses. Each franchisor is
required to provide you with a directory of all of its franchisees
and those who have recently left the system. We will provide you
with several generic questions. You can pick the ones you want to
ask from our list and supplement the list, with questions you want
answered. This is a great way to evaluate a franchise. An even
better way is to visit a franchisee, if one or more are nearby, and
ask them if you can come by to see their business. As long as you
are considerate of their time and don’t get in the way, franchisees
enjoy showing you what they have accomplished. Franchisors may also
provide recommendations for franchisee visits or schedule visits at
company: owned store locations.
Does it Fit? - Once you complete the evaluation
process, it will be time to ask yourself some tough questions. Can I
do this? Do I want to do this? Do I have the necessary resources to
do it properly? Do I have the support of my family? How bad do I
want it?
Discovery Day – Once you have decided that you are
interested in a specific franchise and want to proceed with the
acquisition process, you should schedule a Discovery Day. This is a
day at the franchisor headquarters to meet its staff and learn more
about its support systems. While you should have a list of questions
to gain additional information, you should be prepared for some
specific questions from the franchisor as well. This can best
described as a final feeling out process. You will ask yourself
several more questions during and after the Discovery Day including:
Am I comfortable with the management team? Do they have my interests
at heart? Do they do what they say they are going to do? On the
other side, the management team will also be evaluating you. They
are going to be asking themselves: Do we want this person operating
a business within our franchise network? This is also where a
timeline to establish the business will be set in place if you
haven’t already done so.
The franchise agreement – Some franchisors will send
you, prior to a Discovery Day the franchise agreement ready to
execute with the intent to execute it while you are present. Others
prefer to conduct the Discovery Day and then extend an offer to
license to you the franchise. Either way, by law, you are afforded a
period of a minimum of five business days to decide whether you want
to proceed.
Ultimately your new business’ profit or loss will be determined by
such factors as your franchise territory, site location (if not home
based), and your individual efforts and commitment to following the
systems of the Franchisor. If you are the type of person who wants
to reinvent the wheel … do not acquire a franchise.
Can you
see yourself in the completed picture?
