what should you consider when evaluating a franchise opportunity

What Criteria Should I Use When Evaluating a Franchise Opportunity?

• Has the franchisor been in business long enough to have established the type of business strength you are seeking? YOUR ABILITIES Do you have the technical skills or experience to manage the franchise? Do you have the business skills to manage the franchise? COMPETITION ...
• Is the franchisor planning to grow at a rate that is sustainable?

Full Answer

How to choose the best franchise?

What to look for when choosing a franchise

• A strong support system for franchisees. ...
• Investment in your potential. ...
• The franchisor's professionalism. ...
• Mutual expectations. ...
• Sales and business approach. ...
• Online reviews. ...
• Feedback from current franchisees. ...
• Discussions at official events. ...

How to determine if a franchise is successful?

• What are your reasons for wanting to own a franchise? ...
• Are you driven by financial earnings? ...
• Do you mesh well in the corporate environment? ...
• Do you enjoy working hard, even if the reward seems distant?
• Are you independent? ...
• Are you a risk taker?
• Do you generally have a positive outlook toward your endeavors?
• Do you consider yourself to be a “people person”? ...

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How to make your own franchise in 5 steps?

• Set Realistic Goals. Franchising is more of a marathon than a sprint. ...
• Research Your Competitors. ...
• Develop Your Franchise Offering for Both Individual and Multi-Unit Sales. ...
• Make Sure Your FDD Is Compliant for Every State. ...
• Learn Franchising and Get Involved in the Franchise Community. ...

How much to invest in a franchise?

What Is The Start Up Cost For A Qt Station?

• Investment Range: $25,000 and $30,000.
• Franchise Fees: $25,000
• Cash Investment: $25,000
• Royalty fee: 5% of the monthly gross revenue

How many years of financials should a franchise have?

Financial Statements - Unless the franchisor is a start-up there should be three (3) years of audited financials available. Look for a continuing and growing stream of revenues from franchisee royalties. Initial franchise fees should not represent the preponderance of revenues unless it’s a start-up.

What is franchise training?

Franchisor Training Programs - Franchisee training should be comprehensive and presented by more than one person. Training that includes a portion of onsite training for new franchisees provides real world franchise experience that the classroom can’t duplicate.

Is Forbes opinion their own?

Opinions expressed by Forbes Contributors are their own.

How to make a decision about a franchise?

Don’t become a dreamer. You must be realistic about the future. Then set a final date (3 to 5 days should be enough) and MAKE A DECISION. If you reject the franchise, begin the process again with another company. Time is fleeting and you must work at solving your problem promptly.

What to do if a franchisor doesn't give you a list of franchisees?

If a franchisor (or business opportunity seller) will not give you a list of its franchisees, you should heed the red flashing lights and end discussions.

Why is franchising important?

The location that the business occupies. The franchisor helps with professional site selection. This is critical for site-specific businesses as is the demographic survey that confirms that your territory contains enough target customers.

What happens if a franchisor gets a black eye?

If the company gets a black eye, it will adversely affect you, too. Understand the extent of your restricted or exclusive territory and verify that it makes sense to you and your advisors. Also be sure you compare your favorite franchisor with others in the same industry.

How to find your hidden talents?

If you don’t enjoy math, an accounting franchise isn’t for you, etc. Often outside sources can help here. A personality and aptitude test (similar to those used by major corporations) will help you discover your hidden talents. Determine the earnings capability.

What is franchising a product?

The product or service that is delivered to its customers. The franchisor has proven the need for the product or service. The existing units are already addressing that need. The franchisor has developed a specific business plan showing how to market to its customer base, how to price, sell and deliver the product or service too! There will be training on hiring and training employees to help run the company; guidance on pay schedules and benefits; and details (often computer software) to help manage your money.

What is buying power in franchising?

You will know when you begin, if you have enough money to get started. Buying power will keep costs down and following the prepared plan will help you reach profitability in short order.