Let me start off by telling you that it’s not easy to evaluate newer franchise opportunities. But there are ways to get the information you need to make an educated decision on whether to move forward with the franchise you’ve chosen. Let me show you what they are.
Specific Things You Can Do To Evaluate Newer Franchises
When it comes to evaluating franchise opportunities, research-good research, is the best way to get the information you need. But it can be difficult to do good research on a franchise opportunity that’s barely out of the chute. Here are a few things you can do.
1. Arrange an in-depth call with the person who funded the franchise concept you’re interested in.
During this call, ask her how she came up with the idea for the concept. Ask her how she went about testing the concept out, and for how long, before she turned it into a franchise business. What you’re attempting to do is get a feel for how well-thought out the idea is, and if it’s been tested, and proven to work.
There’s something else I want you to ask on this call, and it’s important.
I want you to ask the founder how she went about franchising her business. That’s because there a couple of ways to do it. They are:
- Hire a franchise attorney to draw up the legal documents required to turn an independent business into a franchise business.
- Hire a franchise development firm to turn an independent business into a franchise. A firm that can help write the operating manual, set up and create marketing systems, new franchise sales programs, and set up a proper franchisee training program. Important: Most of today’s franchise development firms have access to competent franchise attorneys that can help make things legal.
Allow me to share what my Dad told me when I first entered franchising. (Which has to do with “A” above)
“Joel, some franchisors insist on doing things on the cheap, especially at the beginning. If you run into a franchisor that only invested enough money to make his concept a franchise in a legal-sense, you are probably looking at a franchisor that will sell 1, 2, maybe 4 franchises. That’s because the legal aspects of franchising are only a small part of what it takes to launch and grow a successful franchise concept. “
In other words, if you find out that the franchisor you’re interested in partnering with only invested in the legal part of franchising a business, you may want to look elsewhere. It’s usually not enough.
2. Travel to franchise headquarters
It’s one thing to have a phone conversation with the founder of the franchise business you’re interested in buying. It’s quite another to meet and discuss things face-to-face.
Arrange a 2-3-day trip to headquarters. This will enable you to have some valuable 1-on-1 time with the founder and the rest of the staff. It’s your chance to see the team-and the founder in action. An in-person visit, especially if it’s in-depth one, filled with well thought out questions to ask, will prove to be the most* valuable thing you can do towards making an intelligent decision on the franchise opportunity.
*Usually, the most valuable thing you can do, research-wise, is to interview and visit franchisees. In the case of a newer franchise opportunity it may not be possible. That’s because there may not be any franchisees yet, or not a lot of them to talk to. And the ones you do get a hold of may not have enough experience to give you the information you need.
When it comes to evaluating newer franchise opportunities, you must spend most of your time with the franchisor.
The decision you make on whether to buy the franchise or not, is going to come down to trust and feel.
Do you trust the founder and the other members of the team at headquarters?
And does the opportunity feel right?
About the author
