When it comes to number of years spent in the franchise industry, few can compare to Dave Thomas, the founder of Wendy’s International. And when it comes to cut-through-the-hype, common sense advice on important issues related to buying and running a successful franchise, no one can compare to Dave.
I recently reread one of the mandatory classics for anyone looking to be involved in the franchise industry, Dave Thomas’ Dave’s Way. In it, Dave gives his 9 pointers for evaluating a franchise opportunity. Basic? You bet. And if you review some of the stories on the top franchise information sites like FranchisePick.com and UnhappyFranchisee.com, you’ll see that those who made regrettable franchise decisions were usually those who neglected the basics.
Dave’s Tip #1:
Read everything you can about the franchise. Go to the library and read through the trade and business magazines. If you have a stockbroker, call him or her up and see if they have any investment research on the company. Ask for the annual report from the company.
Of course, Dave’s pre-Internet recommendation of going to the library seems quaint, even archaic now that a wealth of information is at your fingertips and on your computer monitor.
Before you invest in a franchise, spend some time and dig deep visiting franchise blogs, franchise information sites that scrutinize and discuss established franchise opportunities as well as emerging and new franchises. Find discussion sites where franchisees share their experiences and opinions of their franchise concepts, of the franchise support and franchisee marketing services.
Dave raises an important point for your due diligence: don’t just research the franchise opportunity, research the entire company, its strategic plan, its goals, and understand how the franchisees fit in the big picture. Is the company financially secure? Is it likely to be sold in the near future? Is franchising and franchisee support a priority for the company, or excess baggage? These are important and often overlooked questions.
Most magazines and websites promote the rosy picture that sells franchise advertising pages, but the truth is out there. Now get digging…