Exploring Your Franchise Passions
When seeking your new business, consider what makes the best fit for you.
By Joe Schumacher
When you consider opening a new franchise, knowing where to begin your search is critical.
The International Franchise Association maintains a database of more than 1,000 different franchise systems. While having details for so many franchise systems in one place is helpful, it’s overwhelming if you don’t know which features are critical in the evaluation process. Selecting the right franchise takes time, so examine many opportunities closely to find the system that is right for you. Following a few general guidelines will help you narrow down your options.
Opening a franchise is usually a commitment of 10 years or more, so look at the franchisor's history and note how long the franchise has been in business, how well the franchise system has fared through economic changes and how well its business model changes to meet the needs of an evolving consumer dynamic.
Prioritize franchises with products or services that are likely to remain in demand or become more popular in the next decade. Ask yourself whether the franchisor’s system has evolved to meet changing consumer needs or demands, and consider whether the product or service could be replaced by technology in the next 10 years, or 20 years.
As a potential franchisee, you should also ask yourself what you are looking for in a franchise. What motivates you? What is your expected return? Keeping these questions in mind will help you prioritize franchises by looking at how the system grows and whether your business can grow with it.
Franchise Your Passions
Most entrepreneurs join a franchise primarily for the turnkey business model with the potential for significant financial returns and support from the franchisor. In other words, entrepreneurs open a franchise to have the freedom of owning their own business while receiving support from an established, successful brand.
Entrepreneurs may choose a franchise based on how passionate they are about delivering a high-quality product or service that aligns with their interests. Fitness industry franchisees, for example, may take pride in helping people reach their workout goals, and artistic entrepreneurs who want to connect with customers might open a BYOB painting franchise. Entrepreneurs who are passionate about high-quality early childhood education might enjoy preschool franchises. These franchisees find deeper meaning in providing a lasting benefit to the young children in their communities.
Your passion to provide a specific service shouldn’t be the only factor behind your decision. You should join a franchise system that supports your passions while maintaining a proven system and a record of steady performance.
Transparency is Key
Transparency is another important trait in franchise systems. A franchisor should be upfront and forthright to demonstrate the franchise’s value to potential franchisees.
Look closely at the Franchise Disclosure Document (FDD) and pay close attention to how much information is included. Some systems are less transparent about what the costs of opening a franchise are and what a potential franchisee’s earning potential could be. Item 19 in a franchisor’s FDD can be an important indicator of the system’s overall fiscal health. The absence of an Item 19 is something to inquire about.
Consider how forthcoming the franchisor is about the financial performance representation, including the franchised units’ actual sales, income, expenses and profits. The franchises that disclose these details are showing confidence in their system, while franchise systems with a less descriptive FDD aren’t providing a prospective franchisee with a full picture of their earning potential.
Perform Due Diligence
A great franchisor should actively encourage you to reach out to franchisees to hear what their experience with the franchise has been like. The franchisees will share what they've learned and experienced as part of the system. Seek out as many franchisees as possible to find out whether the franchisor delivers on the promises it makes. If the franchisor doesn’t connect you to franchisees in the system, track them down yourself.
While gathering feedback from current franchisees, ask whether the franchisor listens to them. A quality franchisor solicits franchisee feedback and gives franchisees a voice in the system. Look for signs of healthy communication throughout the system. A confident franchisor will be open about how closely he or she remains in touch with and supports franchisees. You can also seek out third-party companies that have surveyed franchise systems and produced reports about franchisee satisfaction levels.
While selecting a franchise system can be challenging, the freedom, the potential financial gain and the opportunity to open a business that allows you to pursue your passion can be incredibly rewarding. Take your time before deciding on a franchise, and look for a system that has a promising business model, a product or service you believe in and a culture of open and honest communication with its franchisees.
Joe Schumacher is CEO of Goddard Systems, Inc., franchisor of the The Goddard School, which celebrated its 30th anniversary in 2018. Learn more about Goddard Systems.