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The next excerpt is from Mark Siebert‘s e book The Franchisee Handbook: Everything You Need to Know About Buying a Franchise. Purchase it now from Amazon | Barnes & Noble | Apple Books | IndieBound
Whereas the web is a wonderful software for preliminary research, it ought to function a basis slightly than the only supply of knowledge. Combining on-line analysis with real-world exploration — corresponding to partaking with franchisors, brokers, rivals, and commerce occasions — will present a extra complete understanding of a franchise alternative.
Past digital sources, visiting franchise areas (each native and in distant markets) permits potential franchisees to judge operational high quality, consistency, and buyer expertise. Observing day-to-day operations and evaluating rivals can reveal potential challenges or alternatives not evident on-line or in promotional supplies.
The franchisor
Your first supply of knowledge on a franchise firm would be the franchise company itself. It is going to typically be capable of offer you a wealth of knowledge, together with the franchise disclosure doc (FDD), franchise brochures or different promotional supplies, hyperlinks to franchisee testimonials, and maybe info on the trade basically.
You may count on the franchise salespeople will try and qualify you on the primary name. Most will ask you to fill out a confidential info request type (CIRF) and talk about their course of for mutual analysis. Typical qualifying questions will contain your capitalization, desired geographical area, and timetable for deciding. Assuming you are critical about investing in a franchise, try to be frank along with your solutions.
The salesperson will then typically suggest a collection of steps you will each undergo to be taught extra about one another. A few of the steps might embody a evaluate name to go over the FDD, market visits, calls to franchisees, and investigating the marketplace for your providers. Reap the benefits of this useful resource as quickly as you are right down to your brief listing.
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Franchise brokers
One other useful resource that may assist information you thru the method of shopping for a franchise is a franchise broker. Brokers, who typically name themselves “franchise consultants,” generally is a helpful software in serving to you assess your choices.
Not like a franchise salesperson, a dealer is not restricted to a single franchise idea and will symbolize 100 or extra franchisors. In the perfect networks, the dealer is educated to assist a potential franchisee slender their selections to a handful of opportunities for which they’re well-suited.
Usually, you will not pay a price to the franchise broker. They supply this service in change for successful price (basically a fee) paid by the franchisor — sometimes within the vary of $20,000 or extra — if an introduction they make leads to a sale.
In the end, brokers are an amazing useful resource that may present real worth, however they don’t seem to be the utterly unbiased purchaser’s advocates some would have you ever consider. So whereas brokers are a useful resource you need to actually contemplate, in the end you need to ensure they’ve steered you in the precise path.
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Commerce and Trade Exhibits
One other excellent spot to get info on franchises you would possibly need to contemplate is at franchise trade shows and, if you happen to’re wanting in a particular area, trade reveals. Franchise reveals particularly will provide you with a chance to talk with a number of hundred franchisors from quite a lot of industries in simply a few days.
These reveals produce other benefits as effectively. Typically talking, they provide seminars on all features of franchising — providing you with an opportunity to be taught before you purchase. These seminars function matters like trade traits, understanding contract provisions, veterans’ franchise applications, financing, and general success as a franchisee and are sometimes value attending.
Needless to say these reveals might not present a consultant pattern of the franchise marketplace. The exhibitors are likely to skew barely towards youthful franchises and ones with decrease funding ranges.
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Trade associations
The website of the International Franchise Association accommodates a wealth of knowledge on franchising. Along with permitting you to look choose franchisors, it gives info on trade suppliers in areas corresponding to finance, insurance coverage, veterans’ applications, minority applications, and the franchise shopping for course of.
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Opponents
One other factor try to be doing is visiting competing companies — each franchises and independents — in your neighborhood. Drive round for a day or two, software round on the web and begin taking notes. Who’re the competitors within the companies you might be contemplating? How lengthy have they been round? What are their aggressive strengths and weaknesses? What’s their pricing construction? What sort of areas have they got? Write all of it down — it would present the grist for some good questions for potential franchisors afterward.
Additionally, go to any native institutions which are in the identical normal phase you are contemplating throughout off-peak hours. Speak to the employees, who are sometimes surprisingly keen to share details about how the enterprise is doing if approached accurately. Get a really feel for a way these companies compete within the market.
Should you’re all for a enterprise that does not have a bodily presence, spend your “drive time” on the web their web site. Observe their costs and the way they place the provide. Attempt to get a feel for a way huge their market is. If it is a service-based enterprise, name them up and ask for a quote.
Discover out what benefits they’ve and the way they’re going to compete with you. Ask them the identical questions you requested your focused franchisor. What help providers can they depend on? What does their price construction seem like? What do they consider the market and the franchisor? Maybe they’ll inform you one thing in regards to the firm you did not already know.
When you’re at it, you may additionally need to go to areas to your goal franchisor in some distant markets. See whether or not they’re all run in the identical method. Do they provide the identical services, and at related costs? Are their areas laid out the identical? Are all of them clear and well-run? In case your first response is, “I can do a greater job than they do,” which means the franchisor might not be doing an excellent job of high quality management — and people substandard franchisees will in the end be representing you, as they’re going to be flying the identical flag and telling their clients what they’ll count on after they go to your location.
Additionally, attempt to get a really feel for what the proprietor or supervisor of the enterprise does on a day-to-day foundation. What might seem glamorous when studying about it on the web might grow to be extra mundane if you end up doing the job day in and day trip.
