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A small business blog featuring tips to help entrepreneurs succeed in the small business world. Topics include family business, human resources, marketing, money, networking, operations, ownership, startup, taxes and technology.
Finding the Right Franchise for You
McDonald’s, Two Men and a Truck Movers, AlphaGraphics printing — well known national franchises whose appeal can be quite positive to the potential businessperson. With more than 5,000 franchise opportunities spanning the globe, knowing where to begin can be a bit cumbersome.
Should you invest in a franchise?
You must first determine if a franchise is even the right business endeavor for you. It’s important to understand that franchises are all about consistency. Each franchise unit is run by the same standards as the rest of them. If you are interested, you need to be able to answer “yes” to the following questions:
1. Am I willing to follow and embrace someone else’s business system?
2. Am I capable of being a follower?
3. Am I willing to be part of the franchise network, including accepting decisions that benefit the whole network, but not necessarily me as an individual?
It’s also important to evaluate your professional strengths. A franchise owner must have strong management and customer service skills to fully succeed in this type of business.
What franchises are you interested in?
With so many choices available, you will have to narrow your search to those options you are most interested in. The International Franchise Association and The American Association of Franchisees & Dealers provide franchise directories, reviews and guides to help you sift through the options. The Franchise Business Review provides reports on franchises based upon surveys taken by the franchisees themselves.
There are franchise consultants out there, but before you rely on one, be aware of the fact that franchisers pay them for the new prospects they bring in, so a consultant’s motivation may be a bit biased in favor of the companies they are working for.
What do the details tell you?
Once you’ve narrowed it down to the few franchises you are interested in, it’s time to dive into the details for each of them and figure out which is best for you. Be sure to obtain a Uniform Franchise Offering Circular (UFOC) from each franchise. The UFOC contains information regarding how the business is ran, any litigation or bankruptcy filings, investment costs and fee requirements, the franchise rules and restrictions, and contact information for each of their franchise units.
Take advantage of the fact that you have the contact information for those who have been where you are. Contact other owners in the franchise and get feedback from them. Find out how long it took him to earn a profit. Ask her if the franchiser is as helpful and supportive as he should be. And most importantly, has it been worth the time and money — would he do it all again?
How do you make it official?
Once you’ve determined which franchise you would like to get involved with, you should hire an attorney who specializes in franchising. It’s important that you don’t make a final decision until you’ve consulted an attorney and he/she has examined the Franchise Agreement thoroughly on your behalf.
Franchise Agreements can be tricky and, depending on the details, can turn you off to the idea completely. If you go it on your own, you may not know the fine print requirements. An attorney will help you to comb through the details so that you can be certain that the potential franchise is the right fit for you.
Check back tomorrow for more information on what a Franchise Agreement should contain and what snags to look for.
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