Finding the Right Franchise

							Title:
Finding the Right Franchise

Word Count:
762

Summary:
There are over 2,500 different fran
chises for sale right now. Trying t
o choose the right one might seem l
ike an impossible task. If you are
a first time franchise purchaser, w
here should you begin? The answer i
s not easy; every franchise is uniq
ue and there are hundreds of charac
teristics to review. That said, cer
tain characteristics keep popping u
p when we examine the best franchises.

Here are SmarterFranchises three ke
ys to a great franchise:


Keywords:
Franchise, Franchise Opportunities,
 Information and Research


Article Body:
There are over 2,500 different fran
chises for sale right now. Trying t
o choose the right one might seem l
ike an impossible task. If you are
a first time franchise purchaser, w
here should you begin? The answer i
s not easy; every franchise is uniq
ue and there are hundreds of charac
teristics to review. That said, cer
tain characteristics keep popping u
p when we examine the best franchises.

Here are SmarterFranchises three ke
ys to a great franchise:

1. Multi-unit Ownership
The proof is in the pudding. The be
st indication that a franchisee is
happy with his business is if he sp
ends more money to purchase another
 unit or an additional territory. T
he logic is the same as why Honda h
as such a strong reputation in the
car market. If your uncle Jeff has
bought three Accords in a row, Hond
a must be doing something right.

For the most part, multi-unit owner
s start with one store which become
s so successful that the want a sec
ond and so on. In order to finance
a second store, a lender will exami
ne the first store’s cash flow. If
a franchise wasn’t financially viab
le, it would be nearly impossible t
o open additional units.

Multi-unit ownership is also an ind
ication of operational efficiency i
n a concept. With some franchises,
there is so much work that is impos
sible for the franchise owner to fo
cus on anything but day to day oper
ations. The book, “The E Myth” talk
s extensively about this trap of ge
tting stuck “working in your busine
ss” vs. “working on your business.”
 Even if you never plan to open mul
tiple units, this is an important c
haracteristic, because more likely
than not, you would eventually like
 to retire or at least take a vacat
ion one day.

Be wary of franchise owners who exp
lain low multi-unit ownership by su
ggesting franchisees make enough mo
ney with just one unit. If there is
 one thing history has shown, peopl
e rarely decide they have “enough”
money.

2. Proven Franchisor Track Record
There are three items to think abou
t when examining the franchisor’s t
rack record. The first is an unders
tanding of how much risk there is t
hat the franchisor might go out of
business. Unfortunately, many of th
e 2,500 franchise concepts availabl
e just won’t make it as sustainable
 businesses. If you purchase one of
 these concepts, you may lose much
of your investment.

Second, the franchisor’s track reco
rd should give you an indication ab
out the quality of the concept. Did
 the franchisor own several success
ful stores for many years before de
ciding to franchise his concept or
did he just decide one day that the
re was good money in franchising so
 he better come up with a concept.

Third, franchisors with longer trac
k records have more established tra
ining and support programs. While y
ou might save a few thousand dollar
s buy getting into a franchise earl
y, chances are you won’t get much f
or your investment. New franchisees
 haven’t had the time to put togeth
er development support or training
programs or marketing campaigns. Al
so, if you are one of the first buy
ers, you are the guinea pig which o
ften means more risk. Maybe a new f
ood concept works great in a mall f
ood court or maybe it doesn’t? Woul
dn’t be nice if you weren’t the one
 who had to run the experiment?

3. Strong, independent franchisee as
sociation
Unfortunately, the unspoken reality
 is that the franchisor’s and franc
hisee’s interests aren’t always ali
gned. Eventually, there will be dis
agreements over finances, marketing
 programs or development issues. Kn
owing that issues are sure to arise
, it is helpful to know that you wi
ll have an organized group of franc
hisees who can relate to your situa
tion. Independent associations have
 many benefits. In addition to crea
ting leverage for the purpose of ne
gotiating with the franchisor, an a
ssociation also can improve communi
cation among franchisees. Independe
nt associations also allow members
to pool resources to hire competent
 professionals such as lawyers or f
inancial advisors or marketing cons
ultants. Finally, like with any org
anization, a collective, institutio
nal memory is created. The AFA has
an excellent article on association
s on its site

It is also a negative sign if the f
ranchisor goes out of its way to di
scourage an association. It usually
 means that the franchisor does not
 have the franchisees best interest
s in mind and is afraid of having t
o deal fairly with franchisees.

In addition to independent associat
ions, franchisees may also develop
a co-op to purchase goods at a disc
ount or control a portion of the sy
stem’s advertising budget or develo
p a lobby group for a specific issu
e. All of these our good signs.