Friday, September 19, 2014

Buying a Franchise Business

Having launched and later sold a business I started from scratch, I surprised myself by considering becoming a franchisee, when I felt the time was right to look into a new venture.

The franchise business is a complex one, and more often that not, potential franchisees are affected by the information-overload part of the "dog and pony" intro process, which usually is very confusing and overwhelming.

If you are thinking about buying a franchise (regardless of type or brand), the first thing to do is to have a solid understanding on how the franchise world works. There are many excellent books available on the subject, and they cover both pros and cons of investing in a franchise, so get at least one of each to start forming your own opinion on the subject.

Even though many franchisors advertise that their system allows you to be your own boss, being a franchisee is not the same thing as launching your own business. Things such as hours of operation, how the service or product is displayed, what you can and cannot sell, and more, are not always up to you. The franchisor makes those determinations, and you, as the franchisee, must abide by their rules. You are a cog in a wheel.

I am not making a judgement for or against such rules, but just want to make sure you understand that business ownership and franchise ownership may be similar, but they are not necessarily the same.

Once you have a good basic understanding of what a franchise is, you can start searching for what's available. Chances are you will start looking for business models that are of interest to you, but for the search process to give you the best suggestions, it must be comprehensive and all-inclusive.

Based on your interests, you may think that a food service franchise is the perfect (and only) viable business for you, for example, but you would be surprised at the variety of franchises that are available. So keep an open mind and be ready to consider all sorts of business models.

In my opinion, the best way to narrow down the options that would be a good fit for you, is to have a franchise consultant working for you. Think of him or her as a trusted adviser; one that's familiar with the latest market offerings as well as any special discounts or promotions that are available. For example, some franchisors offer a veteran discount, while others offer a minority discount. There are some businesses that qualify for Small Business Administration (SBA) financing, and more. Your adviser will make all that information available to you.

Franchise consultants are paid by the franchise company if you become a franchisee, so the service will not cost you a dime. Do a web search for franchise consultants in your area and talk to them. These companies also organize conferences where several franchisors promote their offerings and give you more information. And like the consulting services, those events are free of charge and worth attending.

As I continue my research into the franchise options available—and of interest to me, I will post my findings from time to time, in case they are beneficial to you.

But in the meantime, I suggest you do some reading on the subject. You cannot have too much information about how the franchise world works.

These are two good books that should give you a better understanding: