How Do I Choose a Franchise?

Buying a franchise is a serious decision that will affect your life. Don’t rush it. You must conduct a careful study of

The Market – the demand and frequency of use of your products/services. Are they seasonal? How will the market develop in the future? Is the profit margin good enough?

The Competition – how many competitors are out there? Do they offer similar goods and/or services at comparable quality and prices? Are they aggressive advertisers?

The Franchise – you should be clear about the nature of the business: what skills and previous experience are required, what is the workload etc.

The Brand of the Franchisor – how well known is the brand?  How long has it been in the market for? Is it reputable? Even if a brand is new and relatively untested, it has many advantages of unbranded products.    

Training – what forms of instruction and training does the franchisor offer? Is there a Q&A system in place – intranet, customers’ hotline etc?

The Franchisor – who are the people behind the system, how experienced are they, how long has the system been in place?

Growth – how is the chain coming along? How many new outlets are being open and what is their turnover?

The Investment - do you have enough capital to start the business and to take financial responsibility for it until it develops fully? Do you have enough money to support yourself and you family until it does? Do not forget that in real life expenses often far exceed our forecasts.

The Franchisees – how is their business coming along and what kinds of problems do they face? Take a close look at their relationship with the franchisor: do they receive enough training and support from him?

The Contract – before you sign anything, do not omit to get legal counsel. Make sure you are clear about the duration of the contract, what the conditions are for its renewal and what the consequences will be if it is terminated before maturity.