If you’ve ever had the desire to be your own boss and own a business, franchising is a great way to achieve your dream. As a concept, franchising is a sort of hybrid business model. It combines many of the aspects of a sole proprietorship with those of a corporation. Whether you’re a business owner who wants to expand and create a franchise for sale or a novice entrepreneur just starting out, franchising is a great option.
Today, franchising is one of the fastest-growing segments in business. The International Franchise Associations’ most recent report projects franchise establishments to grow by 2.6% in 2019 to over 759,000 units. In fact, the United States has been a leader in franchising since the 1930s when the popular franchises were mostly fast-food restaurants, food inns, and later, motels. Today, four of the top ten franchises are in the foodservice industry, however, franchising now isn’t just about selling French fries.
There are a huge number of franchise opportunities to choose from. Choices exist across many industries from fitness to healthcare, senior living, child enrichment, and services like plumbing, dry cleaning, and exterior construction. You can usually find a franchise for sale with some connection to your areas of interest or expertise.
So how do you find the right franchise for you? Let’s look at what you need to know when researching and choosing the right franchise.
Defining Your Strengths, Interests, and Investment
Finding the right franchise for sale starts with you. You need to take a serious look at several factors to determine the right franchise fit for you. You need to consider your motivation, your areas of expertise, and of course the amount of money you can comfortably invest. Here are some tips to help you define your strengths, interests, and budget.
Before you begin the process of researching to find the right franchise for sale, stop and self-assess. Are you looking for a home-based business? Do you want to work 9 to 5, or a more flexible schedule? How much time and capital can you commit? Answering questions like this can help you narrow your search parameters. For example, if you have $100,000 to invest, you’re not going to have the capital necessary for purchasing a Subway franchise. If you’re looking to work regular office hours, 9 to 5, a fitness franchise might not be the ideal choice. By understanding your needs and reasons for buying a franchise, you’ll be better able to research and find an ideal franchise for sale.
- Consider Upfront (and ongoing) Costs
When you purchase a franchise, according to the FTC, “there are multiple costs and fees.” Typically, you’ll pay an upfront fee to get started. This can range anywhere from a few thousand, to hundreds of thousands of dollars. Once you’ve invested in the system, you’ll have to consider operational costs to get your business started. That can include real estate or rental costs, equipment, and much more. On top of the franchise fee, often you may be required to pay ongoing royalties based on gross income. These could be weekly, monthly, or annually.
- Do the Research with the Help of a Professional Franchise Consultant
While there are business consultants and advisors who can help you, strongly consider meeting with an experienced franchise consultant. You may start the process by doing your own research, but the franchise consultant has a finger on the pulse of a multitude of industries and franchise opportunities. Some franchises are more attractive or pointed toward success than others.
The internet makes it easy to educate yourself and conduct your own research. The reality is, however, that first-hand knowledge doesn’t always make it to public posts and websites. A franchise consultant does the digging to divide diamonds from coal. The knowledge that can be shared is immense, it represents massive time savings over attempting to do it yourself. The recommendation here is simple: Educate yourself on franchising, meet with a franchise consultant, share your background, goals, and abilities. Evaluate the feedback carefully and decide. As a self-starting first lesson, you may wish to visit the FTC and download their Consumer’s Guide to Buying a Franchise.
- Find an Attorney to Help Guide You Through the Legal Side
The legal side of franchising can be confusing and is often complicated. In your research process, one of the documents you’ll receive is a Financial Disclosure Document. This can be a long document where you’ll find your legal responsibilities to the parent corporation and information on bankruptcy filings, any hidden costs, litigation, and other information that may not be disclosed during initial research. It may cost you $2000 but hiring an attorney to review documents is always a good investment.
- Talk with Other Franchise Owners
Have an open honest conversation with other owners of any franchise you’re vetting. Ask questions like:
- How long have you been a franchisee?
- Does owning this franchise meet your expectations personally and financially?
- Would you recommend this company to a friend or family member?
The more honest and open the conversation, the more real information you’ll gather. Most franchisees are willing to help a fellow entrepreneur.
As you define your motivation, needs, and finances, you’ll be able to narrow your search to focus on the right industry, product or service to meet your needs. So, where do you go from here?
Finding the Right Franchise for Sale
When researching you have several options for gathering information. For general information on franchising, the FTC is a great place to start. When searching for a franchise for sale, organizations like Franchise Logic is a great resource.
Franchise Logic provides personalized consultations and information on available franchises to meet your goals, passion, and resources. They have directories, educational opportunities, and networking opportunities that can help you to find the perfect franchise.
The imperative option is to work with a Franchise Consultant. Franchise Logic can help you through the entire process. They help you in defining your goals and establishing a budget, to help with selecting the right franchise. With their assistance, you will understand the deal, and filling out the paperwork will be much less daunting.
If you choose to work with a consultant, look for someone who does not charge any fees and always offers unbiased information. While many consultants have contacts with several franchisors, ultimately, they should be looking out for your best interests.
Stay the Course
Owning your own business can be gratifying personally and financially! Franchising offers you the perfect opportunity to buy into a proven system with an established brand that can often have you making profits much faster than starting a business from scratch. With the right motivation, an understanding of your strengths, goals, and budget, and an entrepreneurial spirit, you can find the perfect franchise for sale that will start you on your path to success!