One of the reasons why franchises are attractive is because they are seen as functional formulas. That does not necessarily mean less sweat, but in one way or another, franchises aim to avoid the basic risks a startup business has to face—all thanks to the franchisor who has already solved them for you.
Nonetheless, choosing the right franchise is not an easy task. In the middle of weighing your options, you realize you have to be forward-looking. Thus, if you find yourself still on the fence, here are some guidelines to help you single out the best.
- Set your goals.
Ask yourself why you want to franchise. Are you going to do it to earn money? To pursue a hobby? To change a career? No answer is wrong, as long as you stay truthful about your goal. The first step to franchising is laying out what you truly want.
- Know how involved you want to be.
Some business owners are hands-on, while others choose to hire people for their businesses. Try to picture yourself in both positions and understand what works better for you.
- Narrow down your options.
Excitement is a good thing, but there are times when it can cloud your judgment. Try to narrow down your options by listing down honest pros and cons.
- Consider the costs.
Franchises are huge investments. Costs can range from franchise fees to training expenses, equipment costs, marketing charges, and insurance. Compute for these fees and compare them to your expected return. Is it worth it?
- Choose according to your skills.
When choosing the right franchise, it would be beneficial to pick something related to your personal skills and interests, even. However, having a basic set of leadership, management, and marketing skills is also important.
- Read (and understand) the FDD.
The Franchise Disclosure Document is basically the bible of franchising. To make an informed decision, it is a must to understand this legal document.
- Seek help from the experts.
The FDD and other franchise laws can be a bit hard to digest. Don’t be afraid to ask help from franchise lawyers who can explain these agreements in simpler terms.
- Communicate with the franchisor.
Nobody can explain a franchise better than the person who built it, but not all franchisors are good at communicating. To avoid issues, make sure to set clear goals between both parties and work on building a long-term relationship.
- Have an exit strategy.
Having an exit strategy does not necessarily imply that you’re being halfhearted about your franchise and will exit as soon as an issue arises. More than anything, it means you are trying to foresee what the future holds for your business.