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What to Look For in a New Franchise

What to Look For in a New Franchise


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Want to buy a franchise opportunity? Great idea! Here is a high-level overview on what to look for:

Operating History – A long history of success is the #1 thing to look for. If many other franchisees have been successful over the years, your chances are probably pretty good that you will be successful too.

Location, location, location – Investigate the territory rights. Make sure that your site selection is a good one. Don’t settle for a second rate site.

Investigate – Don’t believe everything you hear or read from the franchisor! Investigate. Lean on those experts around you such as an attorney or an accountant. Visit some existing franchisees(choose to visit ones that the franchisor does not recommend, not just the ones that they feed you).

Labor pool – If your franchise is labor intensive (example: restaurant), what is the depth and quality of the available labor pool? Any business needs a strong qualified workforce in order to succeed.

Initial training – Make sure that you and all key employees are adequately prepared. Grand opening support is a must.

Ongoing support – A critical component for success. Make sure that all levels of support are included, and get it in writing upfront! Don’t rely on their statement, “Don’t worry, we will take care of you”.

Marketing programs – Franchise marketing is important. Make sure that any marketing dollars contributed to the franchisor are spent wisely.

Purchasing power – Can the franchisor pass on cost savings to you based on mass purchasing power?

Investment amount – While the upfront cost of the investment can seem expensive, in the long run it is probably not. A more significant expense can be the ongoing royalty and marketing fees.

Exit strategy – If the opportunity does not work, what is your exit strategy? Will the franchisor assist you in re-selling the franchise? Will they help market it for you? Many franchisors will actually provide a section on their web site for franchise re-sales. Beware if there are a lot of re-sales relative to the total number of franchises in existence.

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