How to Evaluate a Franchise Opportunity
Now that you’ve narrowed down your list of possible franchise investment opportunities, the next step in your elimination process is to evaluate the brands on your list. Researching a franchise and learning the fine details before signing the contract is crucial. Armed with the right knowledge, you can make an educated decision on whether to further invest in a franchise. Here are a few helpful questions you should consider when evaluating a franchise opportunity.
Is it a Good Fit?
Perhaps the most important aspect of the franchise opportunity to evaluate is whether it’s a good fit for you. On average, a franchise agreement is good for 5 years. In some cases, it’s 10 to 20 years. That’s a long time to be tethered to a franchise that isn’t a good fit right? Ensuring that the franchise you’re evaluating matches your business needs, goals, and personal values are paramount to your overall happiness and a healthy business.
The Company’s History
How long a company has been in operation isn’t always an indicator of its success, but a franchise that’s been around for years is typically a sign of good things. It shows that the company knows how to adjust and adapt. The franchise disclosure document is an excellent resource for informing yourself about its history, management, revenue, and any litigations on record. Before committing, be sure to do a deep dive.
Franchise fees aren’t just limited to the initial fee you pay when you sign on. It encompasses all of the costs you pay as a franchisee: service fees, software, licensing, continuing fees, etc. The best way to prepare for a franchising career is first, list out and evaluate the various fees you’ll be required to pay throughout your agreement. Then, decide if it’s something you can stay on top of.
Each franchise has its way of doing things, from conducting business and specific vendors used, to signature phrases and a dress code. The franchise agreement details these restrictions, along with other limitations, rules, and guidelines; all things a franchisee can and can’t do once they sign up. As you’re evaluating the franchise opportunity, consider if the requirements are too strict or unrealistic to uphold. If you’re unsure, hire a professional to give you peace of mind and vet the possibility of future surprises.
What Does the Support Look Like?
The support you get from a franchisor varies dramatically from franchise to franchise, so before you sign on the dotted line, inquire about how the franchise will help you reach your goals. It’s crucial in the recipe for success. Plus, the level of support a franchisor provides is one of the most significant factors in franchisee satisfaction.
Support can come in various ways, including training, financial advice, and advertising. So, as you evaluate the franchise, don’t hesitate to ask questions like “how much support do you get while onboarding?” and “what does support look like going forward?”
Hundred Acre Consulting
Finding the perfect franchise that aligns with your business needs and goals is a key factor in your overall success as a franchisee. If you’re struggling to find that franchise opportunity or need advice as you evaluate a franchise, lean on Hundred Acre Consulting. We’re eager to help you find success.
Contact our team at Hundred Acre Consulting, and let’s get started!