Ten Tips For Choosing The Right Franchise Business

First for those of you who are new to the idea of franchising, here is a brief definition: Franchising is the permission given by one person, (the Franchisor) to another person (the Franchisee) to use the Franchisor’s trade name, trade marks and business system, in return for an initial payment (the franchise fee) and further regular payments (royalty fees).

Here are some common sense tips to help you to choose franchise business:

1. Meet the Franchisor and as many of the people in the operation as possible. Ask yourself how you feel about them, do you like them, trust them, enjoy their company? Do you want to “partner” with them for a long period of time as you develop and run your business? Be sensitive to how the franchisor treats you while you are evaluating the opportunity. Are they timely, professional, open, understanding. Do they communicate appropriately and frequently and show integrity? These first interactions are an important franchise indication of the for relationship you would have with the Franchisor. Ask yourself if you would be proud to be associated with them.

2. Speak to as many of the existing franchisees as possible. Are they enjoying their franchise? Do they get the support they need from the Franchisor? Is the Franchisor easy to do business with? Does their experience back up the claims made by the Franchisor about the potential of the business?

3. Compare the financial predictions of the business potential the Franchisor gives you with the real results of a number of the existing franchisees. Look at the most successful franchise and also look at the results for the least successful franchise. Have there been any franchise failures?

4. Visit at least one of the franchise operations in action. Can you picture yourself in that environment and doing the daily activities required to run the business? Will you really enjoy what you are doing and look forward to getting up each morning?

5. Do you believe passionately in the product or service you will be offering? Every business will require some sort of selling to develop customers. If you believe in what you are offering that belief will shine through when you offer it to others and you will find it easy to sell with full integrity and transparency.

It is estimated that more than 40% of small firms cease trading within 3 years (Ganguly 1985). However, in comparison to starting a small business, franchising has proved to be successful. 94% of new franchise businesses are still operating profitably 5 years on. A study by Castrogiovanni Justis and Julian 1993 provides evidence to suggest that franchises are less likely to fail than other types of small business organisations.

However all franchise opportunities are not the same, and all franchisees have differing needs and skills. Follow my ten tips to ensure that your franchise is highly successful on a commercial, professional franchise and personal level.

These tips have grown out of my experience building a franchise network that we hope embodies the best of commercial, professional and personal development practices.