Getting Started in Franchising

Regardless of your business experience or skill set, if you are thinking of owning a franchise, here are some things you need to consider.

What Interests You: Many people compare entering a franchise agreement to a marriage. You have to be sure the business will hold your interest over the term of the franchise agreement—many of which can be 10 or 15 years long. It is important to think about what would achieve this—your role in the business, the focus of the business, other factors.

Brand Recognition: Well-known franchise brands with a good reputation are more likely to attract customers faster than relatively new ones. If you opt to invest in a younger franchise, you’ll have to work even harder to create customer demand.

Your Exit Strategy: Your long-term business goals should be a major factor when selecting a franchise to invest in. Whether you want to pass your franchise business on to a family member or ultimately sell the business will influence which franchise model is best for you.

Complaints: It’s a good idea to see if any complaints have been filed against the franchisor with franchise regulators, Better Business Bureaus, or local consumer protection agencies in your state or the franchisor’s home state. You should also compare online customer reviews to reviews of similar businesses in your area. If there are complaints about the company, or low customer satisfaction reviews, this should be a huge red flag.

Strong franchise systems excel in several areas. It’s important to ensure the brand you are considering does so as well.

Does It Deliver in Key Areas? Strong franchise systems excel in several areas. It’s important to ensure the brand you are considering does so as well.

• Training and Support: You will get a big head start in achieving success with your business and likely be able to sustain it if the initial training and ongoing support by your franchisor is strong. You want to ensure you won’t simply be trained and then left to fend for yourself.

“Very few of our franchisees have remodeling experience. We provide them with a two week training course that gives them a strong foundation in the remodeling business followed by three to four months of ongoing training,” says Nolte of Kitchen Solvers.

“We provide new franchisees with at least eight weeks of intensive training in all areas of business ownership, management, sales, local marketing, and specifically in how to service the customer and deal with many insurance companies to offer the most competitive prices possible,” says Jose Merille, President of Estrella Insurance. “Then we spend additional time when they open their business in order to get them going.”

• Leadership: Established brands clearly have years of experience selling goods or services and managing a franchise system. For newer brands, you need to find out if the management team has what it takes to successfully grow the system. Our research reveals the following regarding franchise leadership: When asked if they respect their franchisor, 84% of franchisees replied yes. When asked if they believe their franchisor acts with a high level of integrity, 81% replied yes.

• Marketing: No matter what you sell or where you’re located, effective marketing will help you get customers. Most franchisors take care of national marketing, but many expect the franchisees to take care of their local marketing. It’s important to understand what your marketing fees will be and what they will include.

• Innovation: Consumers have many choices these days, so it is important the franchise is constantly making strategic efforts to positively stand apart from the competition.

Valuable insight into many of the areas above can be obtained via two sources:

1. Franchisees: Speak with current franchisees and ask the franchisor to share their franchisee satisfaction survey results. Many of the brands featured in this report share their franchisee satisfaction survey results for free within the Franchise Reviews section of FranchiseBusinessReview.com.

2. Franchise Disclosure Document (FDD): A franchisor’s FDD provides you with information about the brand, its system, and the agreements you will need to sign.

Considering franchises that are well regarded by their franchisees, is a great way to immediately narrow your focus.

Although there are many success stories, franchising is not for everyone. Be sure to take the time to do the due diligence required in order to evaluate your findings and determine the best path for you. Considering franchises that are well regarded by their franchisees, is a great way to immediately narrow your focus.