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The next excerpt is from Mark Siebert‘s ebook The Franchisee Handbook: Everything You Need to Know About Buying a Franchise. Purchase it now from Amazon | Barnes & Noble | Apple Books | IndieBound
Whereas the web is a superb software for preliminary research, it ought to function a basis quite than the only real supply of knowledge. Combining on-line analysis with real-world exploration — corresponding to partaking with franchisors, brokers, opponents, and commerce occasions — will present a extra complete understanding of a franchise alternative.
Past digital assets, visiting franchise places (each native and in distant markets) permits potential franchisees to guage operational high quality, consistency, and buyer expertise. Observing day-to-day operations and evaluating opponents can reveal potential challenges or alternatives not evident on-line or in promotional supplies.
The franchisor
Your first supply of knowledge on a franchise firm would be the franchise company itself. It should typically have the ability to give you a wealth of knowledge, together with the franchise disclosure doc (FDD), franchise brochures or different promotional supplies, hyperlinks to franchisee testimonials, and maybe info on the trade on the whole.
You’ll be able to anticipate the franchise salespeople will try and qualify you on the primary name. Most will ask you to fill out a confidential info request kind (CIRF) and talk about their course of for mutual analysis. Typical qualifying questions will contain your capitalization, desired geographical area, and timetable for deciding. Assuming you are severe about investing in a franchise, you need to be frank together with your solutions.
The salesperson will then usually suggest a sequence of steps you may each undergo to study extra about one another. A number of the steps could embody a evaluate name to go over the FDD, market visits, calls to franchisees, and investigating the marketplace for your providers. Make the most of this useful resource as quickly as you are right down to your brief checklist.
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Franchise brokers
One other useful resource that may assist information you thru the method of shopping for a franchise is a franchise broker. Brokers, who usually name themselves “franchise consultants,” is usually a helpful software in serving to you assess your choices.
Not like a franchise salesperson, a dealer is not restricted to a single franchise idea and will symbolize 100 or extra franchisors. In the very best networks, the dealer is educated to assist a potential franchisee slender their selections to a handful of opportunities for which they’re well-suited.
Usually, you will not pay a payment to the franchise broker. They supply this service in change for a hit payment (basically a fee) paid by the franchisor — usually within the vary of $20,000 or extra — if an introduction they make leads to a sale.
Finally, brokers are a terrific useful resource that may present real worth, however they are not the fully unbiased purchaser’s advocates some would have you ever consider. So whereas brokers are a useful resource it’s best to actually take into account, finally it’s best to ensure they’ve steered you in the precise route.
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Commerce and Trade Reveals
One other excellent place to get info on franchises you may need to take into account is at franchise trade shows and, if you happen to’re wanting in a particular area, trade exhibits. Franchise exhibits specifically will provide you with a possibility to talk with a number of hundred franchisors from a wide range of industries in simply a few days.
These exhibits produce other benefits as effectively. Usually talking, they provide seminars on all points of franchising — supplying you with an opportunity to study before you purchase. These seminars function subjects like trade developments, understanding contract provisions, veterans’ franchise applications, financing, and total success as a franchisee and are sometimes value attending.
Needless to say these exhibits could not present a consultant pattern of the franchise marketplace. The exhibitors are likely to skew barely towards youthful franchises and ones with decrease funding ranges.
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Trade associations
The website of the International Franchise Association comprises a wealth of knowledge on franchising. Along with permitting you to go looking choose franchisors, it supplies info on trade suppliers in areas corresponding to finance, insurance coverage, veterans’ applications, minority applications, and the franchise shopping for course of.
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Rivals
One other factor you need to be doing is visiting competing companies — each franchises and independents — in your neighborhood. Drive round for a day or two, software round on the web and begin taking notes. Who’re the competitors within the companies you’re contemplating? How lengthy have they been round? What are their aggressive strengths and weaknesses? What’s their pricing construction? What sort of places have they got? Write all of it down — it is going to present the grist for some good questions for potential franchisors in a while.
Additionally, go to any native institutions which can be in the identical basic phase you are contemplating throughout off-peak hours. Speak to the employees, who are sometimes surprisingly keen to share details about how the enterprise is doing if approached appropriately. Get a really feel for the way these companies compete within the market.
In case you’re fascinated with a enterprise that does not have a bodily presence, spend your “drive time” on the web their web site. Observe their costs and the way they place the provide. Attempt to get a feel for the way massive their market is. If it is a service-based enterprise, name them up and ask for a quote.
Discover out what benefits they’ve and the way they’re going to compete with you. Ask them the identical questions you requested your focused franchisor. What help providers can they rely on? What does their payment construction appear like? What do they consider the market and the franchisor? Maybe they will let you know one thing in regards to the firm you did not already know.
When you’re at it, you might also need to go to places on your goal franchisor in some distant markets. See whether or not they’re all run in the identical method. Do they provide the identical services, and at related costs? Are their places laid out the identical? Are all of them clear and well-run? In case your first response is, “I can do a greater job than they do,” which means the franchisor will not be doing an excellent job of high quality management — and people substandard franchisees will finally be representing you, as they’re going to be flying the identical flag and telling their prospects what they will anticipate once they go to your location.
Additionally, attempt to get a really feel for what the proprietor or supervisor of the enterprise does on a day-to-day foundation. What could seem glamorous when studying about it on the web could change into extra mundane when you’re doing the job day in and time out.
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