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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 fairly than the only real supply of knowledge. Combining on-line analysis with real-world exploration — resembling participating with franchisors, brokers, rivals, 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 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 to give you a wealth of knowledge, together with the franchise disclosure doc (FDD), franchise brochures or different promotional supplies, hyperlinks to franchisee testimonials, and maybe data on the trade usually.
You may count on the franchise salespeople will try to qualify you on the primary name. Most will ask you to fill out a confidential data request kind (CIRF) and focus on their course of for mutual analysis. Typical qualifying questions will contain your capitalization, desired geographical area, and timetable for deciding. Assuming you are severe about investing in a franchise, you ought to be frank along with your solutions.
The salesperson will then usually suggest a sequence of steps you may each undergo to be taught extra about one another. Among the steps might 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 brief record.
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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 usually name themselves “franchise consultants,” generally is a precious software in serving to you assess your choices.
In contrast to a franchise salesperson, a dealer is not restricted to a single franchise idea and should signify 100 or extra franchisors. In the very best networks, the dealer is skilled to assist a potential franchisee slender their selections to a handful of opportunities for which they’re well-suited.
Sometimes, you will not pay a charge to the franchise broker. They supply this service in change for a hit charge (primarily 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 a terrific useful resource that may present real worth, however they don’t seem to be the fully unbiased purchaser’s advocates some would have you ever imagine. So whereas brokers are a useful resource you need to definitely think about, in the end you need to ensure they’ve steered you in the appropriate route.
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Commerce and Trade Exhibits
One other excellent place to get data on franchises you would possibly need to think about is at franchise trade shows and, if you happen to’re trying in a particular discipline, trade exhibits. Franchise exhibits particularly offers you a possibility to talk with a number of hundred franchisors from a wide range of industries in simply a few days.
These exhibits produce other benefits as nicely. Usually talking, they provide seminars on all facets of franchising — providing you with an opportunity to be taught before you purchase. These seminars function matters like trade tendencies, understanding contract provisions, veterans’ franchise packages, financing, and total success as a franchisee and are sometimes value attending.
Remember the fact that these exhibits might not present a consultant pattern of the franchise marketplace. The exhibitors are inclined 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 incorporates a wealth of knowledge on franchising. Along with permitting you to look choose franchisors, it supplies data on trade suppliers in areas resembling finance, insurance coverage, veterans’ packages, minority packages, and the franchise shopping for course of.
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Rivals
One other factor you ought 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 places have they got? Write all of it down — it is going to present the grist for some good questions for potential franchisors afterward.
Additionally, go to any native institutions which might be in the identical normal phase you are contemplating throughout off-peak hours. Speak to the employees, who are sometimes surprisingly prepared 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.
If you happen to’re involved in a enterprise that does not have a bodily presence, spend your “drive time” on the web taking a look at their web site. Word their costs and the way they place the supply. 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 will compete with you. Ask them the identical questions you requested your focused franchisor. What assist companies can they depend on? What does their charge construction appear to be? 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 in 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 products, 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,” which means the franchisor might not be doing a superb job of high quality management — and people substandard franchisees will in the end be representing you, as they will be flying the identical flag and telling their clients what they will 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 become extra mundane when you find yourself doing the job day in and time out.
