Franchises can be a great way to own your own business and work for yourself without taking on too much risk. The parent company has a proven system and support and training for entrepreneurs. Here are the steps to own a franchise.
Think About Your Goals
Before you own a franchise, you should do some self-evaluation. What is important to you? What are you good at? What could you see yourself doing for the next 5 to 10 years? Where do you want to live and work? What do you hope to achieve? Are you self-motivated? Owning a business isn’t easy, but it is rewarding. You’ll come back to this step, so write these things down.
After the Great Recession of 2008, it’s much harder to get financing. It doesn’t mean impossible, but you do need to have a clear idea of how much money you have available. You’ll want to work on your credit score, look into SBA loans and determine if you have any other sources available.
Before you look into individual companies, focus on categories. Evaluate the industry based on your answers in Step 1. If you’re unable to move, you may want to consider the viability of an industry in your community.
Identify Segments of the Industry That Could Be Successful
You want to own a franchise that will do well regardless of the economy. Senior care and fast food tend to do well no matter what happens to the marketplace. But when times get tough, people tend to forego expensive retail or services such as dog walking. Look for recession-resistant industries that boost your chances for long-term success.
Identify Individual Franchise Opportunities
Do your research before you buy into a franchise to ensure that you’re choosing one that fits your needs. You need to make sure that the franchise is available in your area. Once you choose a few companies, you’ll want to look at them more in detail. It’s okay to have a long list, because you’ll narrow it down even farther as you go through the next steps.
Get Preliminary Information
Contact the franchise development department of each company and get some basic information. You should have a good list of criteria that you developed already. Check your criteria against the company to see if it might be a match. You may also need to fill out a qualification questionnaire at the franchise, so they can make sure you’ll be a good fit.
Study the Franchiser Disclosure Document
Once you’ve narrowed your choices to two or three, you’ll want to study the FDD, which is an FTC-mandated disclosure document. You’ll get history about the executives, extensive information about the franchise, litigation that the franchise has gone through and much more. You should go through the information carefully. Make notes about your questions.
Visit Existing Franchisees
Call or visit existing franchisees and ask them about the company and their business. You can learn a lot from someone who has gone through the process. You want to get a feel for the reality of the startup and how supportive the franchiser really is.
Visit the Franchise Headquarters
If you’re convinced that the franchise is a good opportunity, you’ll want to go to the headquarters and get your final questions answered. You should keep evaluating their business. Keep in mind that they are still evaluating you, to make sure that you will fit into their business model.
Make Your Decision
If you’ve worked through the steps listed in this article, you’ll have the information you need to make sure you’re making a good choice. The franchise needs to match with your skills, resources and needs. But you’ll need to do your part and put in the hard work to make your franchise successful.