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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 superb software for preliminary research, it ought to function a basis reasonably than the only supply of data. Combining on-line analysis with real-world exploration — comparable to partaking with franchisors, brokers, opponents, and commerce occasions — will present a extra complete understanding of a franchise alternative.
Past digital sources, visiting franchise places (each native and in distant markets) permits potential franchisees to guage operational high quality, consistency, and buyer expertise. Observing day-to-day operations and evaluating opponents can reveal potential challenges or alternatives not evident on-line or in promotional supplies.
The franchisor
Your first supply of data on a franchise firm would be the franchise company itself. It should typically have the ability to offer you a wealth of data, together with the franchise disclosure doc (FDD), franchise brochures or different promotional supplies, hyperlinks to franchisee testimonials, and maybe info on the trade typically.
You’ll be able to anticipate the franchise salespeople will try to qualify you on the primary name. Most will ask you to fill out a confidential info request kind (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, you need to be frank together with your solutions.
The salesperson will then typically suggest a sequence of steps you will each undergo to study extra about one another. Among the steps could embody a evaluation name to go over the FDD, market visits, calls to franchisees, and investigating the marketplace for your companies. Reap the benefits of this useful resource as quickly as you are all the way down to your quick 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,” could be a beneficial 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 characterize 100 or extra franchisors. In the perfect networks, the dealer is skilled to assist a potential franchisee slender their decisions to a handful of opportunities for which they’re well-suited.
Usually, you will not pay a charge to the franchise broker. They supply this service in change for successful charge (primarily a fee) paid by the franchisor — usually within the vary of $20,000 or extra — if an introduction they make leads to a sale.
In the end, brokers are an incredible useful resource that may present real worth, however they are not the fully unbiased purchaser’s advocates some would have you ever imagine. So whereas brokers are a useful resource it’s best to definitely take into account, in the end it’s best to ensure they’ve steered you in the proper course.
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Commerce and Business Exhibits
One other excellent spot to get info on franchises you would possibly need to take into account is at franchise trade shows and, should you’re wanting in a particular discipline, trade reveals. Franchise reveals specifically will provide you with a possibility 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 properly. Typically talking, they provide seminars on all features of franchising — providing you with an opportunity to study before you purchase. These seminars function subjects like trade developments, understanding contract provisions, veterans’ franchise applications, financing, and total success as a franchisee and are sometimes value attending.
Remember that these reveals could 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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Business associations
The website of the International Franchise Association incorporates a wealth of data on franchising. Along with permitting you to look choose franchisors, it supplies info on trade suppliers in areas comparable to finance, insurance coverage, veterans’ applications, minority applications, and the franchise shopping for course of.
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Rivals
One other factor you need to be doing is visiting competing companies — each franchises and independents — in your group. 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 places have they got? Write all of it down — it would present the grist for some good questions for potential franchisors in a while.
Additionally, go to any native institutions which can be in the identical common section you are contemplating throughout off-peak hours. Speak to the workers, who are sometimes surprisingly keen to share details about how the enterprise is doing if approached accurately. Get a really feel for the way these companies compete within the market.
Should you’re keen on 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 the way large 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 companies can they depend on? What does their charge construction appear like? What do they consider the market and the franchisor? Maybe they will let you know one thing concerning the firm you did not already know.
When you’re at it, you might also need to go to places 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 places 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,” meaning the franchisor is probably not doing a very good 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 prospects what they will anticipate 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 could seem glamorous when studying about it on the web could change into extra mundane when you find yourself doing the job day in and day trip.
