Without question, you should consider using established guidelines when shopping for a franchise opportunity. Also, you need to take into account personal considerations, as well as certain elements you are looking for in a franchisor.
Your own personal checklist might look like this:
- I have enough money (or can borrow enough money) to meet upfront fees and ongoing fees for at least 18 months.
- The day-to-day operations in this franchise are in sync with how I’d like to spend my time.
- The day-to-day management responsibilities are harmonious with my strengths, talents, and skills.
- I believe that the future of the franchise opportunity combines vision and practicality.
- The structure of the organization (private, public, soon to go public) is one I find acceptable.
- I know how many hours I’m willing to invest weekly in the business.
Also, you should formulate a checklist regarding the franchisor:
- The person at the helm of the franchise opportunity has a strong reputation and is personable.
- The culture of the franchise opportunity is in sync with my own values and style.
- The franchise organization is financially healthy.
- The litigation history is acceptable and has been explained satisfactorily.
- The organization has had consistent franchise growth.
- The organization has a strong franchise owners association that works in concert with management.
- Management shows openness to new ideas.
- Earnings claims are available and satisfactory — or if they are not available, franchisees are willing to help you to understand the financial picture.
- Franchisor does or does not require franchisees to work the business full time, and that requirement meets with my criteria.
- Franchisor is clear on whether and how it supports multiunit opportunities, and that framework meets with my long-term goals for the business.
As part of your due diligence, you should also:
- Review the organization’s franchise disclosure document, or FDD.
- Interview a varied group of franchisees with a list of questions you’ve thought through ahead of time.
- Visit a local unit or two.
- Visit the organization’s headquarters and meet with key management.
Finally, while I fully acknowledge the necessity of careful research and asking all the right questions, at some point a decision needs to be made. In my mind, the decision comes down to the “magic click”. Questions to ask yourself include:
- Does this opportunity feel like the right fit for me?
- Do I feel comfortable conversing with management and fellow franchisees?
- Can I see myself becoming a member of this franchise family? A leader within the organization?
- Can I see myself having fun while managing this business?
- Do I see a values and personality fit with the key players?
- Do I see myself growing side by side with this organization?
- Are my instincts telling me this is the right business organization for me?
For years, I put my head together with prospective franchisees, who were examining our system for its solvency and future. My sales team and I answered question after question on their respective checklists, but when it came down to the final decision, I asked my prospects to check their heart and their gut.
Because the truth is, the partnership between franchisee and franchisor needs to “click,” and it needs to click for both parties. Trust me — if there’s any key answer to look for, it’s the one about the click. When it’s there, you know it, and you have a good chance of working successfully with that organization. Please, pay attention to your instincts before you sign on the dotted line.
Flo Schell, EdM, is former vice president of Franchise Development for Sylvan Learning Systems Inc. and founder of Franchise Coaching Systems. She has also written a book, Stop Selling: Start Clicking, that explains her successful sales process. To learn more about the services offered by Franchise Coaching Systems, visit FloSchell.com.