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How to Find Good Franchise Opportunities

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Welcome to part two of our series onbuying and running a successful franchiseIn this tutorial, and give you some useful resources for finding the best ones to invest in, we’ll take you through the steps involved in searching for franchise opportunities

Of course, Before you start your search, it’s important to have a clear understanding ofhow franchising works and whether it’s right for you

Assuming you’re clear on what you’re getting into and are confident that buying a franchise is the right move to make at this point in your life, it’s time to look for a franchise to buy

Drawing up a shortlist, from deciding on the type of franchise you’re looking for to searching for specific opportunities, So in this tutorial we’ll take you through the process, and asking for expert advice

By the end, you’ll be ready to go out and find franchises in your area with strong long-term prospects. You’ll still need to do some careful research before buying, and we’ll cover that in future tutorials in the series, of course. This tutorial is aimed at generating a strong shortlist for you to start investigating

Step 1: Set Your Criteria

Often, people let someone else choose their franchise for them. Or get approached by a salesperson, They get a particular opportunity recommended to them by a friend or colleague, and after a quick investigation they put down their money and get started, or see an ad

It’s important that you’re the one making the choice, While there’s nothing wrong with getting other people’s opinions. Even if you’ve had a particular franchise recommended to you, it’s still worth researching some others, so that you can make sure you’re getting the best deal

So start with establishing your own criteria for a franchise. Draw on the self-evaluation you did in the previous tutorial, and use it to define what sort of franchise you want to run

Franchising expertJim Coen recommends asking yourself which of these are most important to you:

  • Independence
  • Money
  • Freedom
  • Flexibility
  • Growth
  • Challenge
  • Variety
  • People

Look at your personal finances to establish the amount you can comfortably invest in the initial franchise fee and setup costs, Then. Just like any other business venture, it’s important not to over-extend yourself, As we mentioned before, because in a franchise, there will always be unexpected expenses no matter how well you plan. Leave yourself a cushion, so that you can survive a few setbacks without going under

And what risks you’re prepared to take, Think about how much money you want to make, how hard you’re prepared to work to make it. So decide whether you want a riskier business that could really pay off, Different franchises have different risk/reward profiles, or prefer to play it safer and receive a steady income. A fast-food restaurant that’s open from early morning to late evening every day of the week, Some franchises also require a big time investment—for example. Be honest about the hours you’re prepared to work, and how you’ll manage the commitment.  

Also consider your own interests. You’ll be spending a lot of time working at this franchise, so it’s great if it’s something you care about. For example, Some franchises are purely business opportunities—few people have a passion for convenience stores, and yet many people run them successfully. But if you have at least some interest in what you’re doing, it’ll make things much easier

Including at least the following:, The goal of this first step is to come up with a simple list of characteristics for the ideal franchise

  • Preferred type of business
  • Business size
  • Location
  • Any particular brands you’re interested in
  • Your budget
  • Amount of risk you’re prepared to take on
  • Hours you’re willing to work on a regular basis
  • Level of support you need from the franchisor

Step 2: Draw Up a Shortlist

It’s time to create a shortlist of actual franchises you’d be interested in researching further, When you’ve got a clear idea of what you’re looking for

But first start a spreadsheet, with your main criteria as columns, We’ll cover resources you can use to find these franchises in the next couple of steps, and space to add particular franchises as rows underneath

It could look something like this:

You can customize it, adding columns based on the criteria that you’ve decided are important to you, of course. The point is to have a place to capture all the information you’re about to find. There’s a lot of information available on the web and elsewhere, and it can become quite overwhelming. So whether you use this spreadsheet or another format, make sure you have a way of easily listing possible franchises and comparing their most important features. Your goal will be to come up with at least 10 franchise possibilities

Where do you find the franchises and the information you need to fill out your shortlist. We’ll cover that next

Step 3: Use Online Resources

And provide you with the data you need to start populating your shortlist, Online franchise directories can give you a good overview of major franchises available in your chosen industry

A great place to start your search isEntrepreneur’s Franchise 500 RankingsOr search by industry, You can either look at the overall rankings, or filter by characteristics like “low cost” or “fastest growing. ”

But remember that you have your own criteria, and they may be different from those used in the ranking, The rankings themselves are useful as an overall guide. So don’t feel compelled to shortlist only the top-ranked franchises. Drill down and look at the more detailed information in the profile of each franchise. And much more, You can find out how long each one has been in business, what kind of support is offered, what the setup costs are

The International Franchise Association also has a search page on its website.  Access their franchise directory In it, or conduct a more advanced search, by category or by investment amount, you can find franchises by keyword. Although not as much as on the Entrepreneur list, There’s also some basic information provided on each franchise.  

Some more useful than others, There are literally dozens of other franchise directories out there. Review a good list of some of the mostpopular franchise sitesAnd the criteria for listing each franchise, It’s a good idea to consider the motivation of each directory provider. You want to make sure you really are getting independent information

Either in general or in particular industries, Also look out for articles in the media about franchising. This piece inThe StreetHighlighting five top franchises and giving general advice and information on fitness franchising, for example, covers fitness franchises. Or this one inForbesLists the top 12 fast food franchises by single-store revenue

Keep in mind that there’s no shortage of information on the web, so your goal is not to findMoreBut to find more reliable information about the best ones, franchises. Stick to sources you can trust, and keep your main criteria in mind all the time. Concentrate on finding solid data that will help you fill out your shortlist, Instead of looking for recommendations about “hot” opportunities

Step 4: Check With Local Consultants and Brokers

Although you can do a lot of research without leaving your computer, it’s still worth going out and meeting people in your local area to find out about opportunities you may have missed

So you can probably find one happening near you, Franchise expos are held regularly in many different locations. These events generally provide training and seminars, along with the opportunity to meet franchisors

That many of the people you meet will be trying to sell to you, Keep in mind, though. It’s best not to make any commitments on the spot, no matter how attractive an opportunity sounds. View the expo as an opportunity to find new franchises to add to your shortlist, Instead, focusing on gathering information and asking questions

Another good option is to find a local franchise expert—a consultant or broker who can give you advice and help you find good franchises

Though, You need to tread carefully. Many consultants and brokers don’t charge any fees to potential franchisees, which can seem like a good deal. But remember that they’re getting paid by someone, and that may affect the advice they give. Often they get commissions for recommending particular franchises

The Federal Trade Commission’sConsumer GuideWarns consumers to be aware of the following:

  • Franchise brokers may offer a limited selection of franchises
  • That selection may be based more on their commissions than your own interests
  • Some brokers “may steer you toward a more costly franchise to beef up their own commission. ”
  • Promised earnings figures may be misleading

The bottom line: a truly independent consultant is a wonderful resource for you in helping you identify good franchise opportunities. Knowledge and connections, They can bring valuable experience. But just as with the web resources we looked at earlier, you need to ask about the motivation of any franchise expert you deal with. What’s their incentive, Who pays them, and what are their criteria for recommending particular franchises

Or seems too good to be true, particularly if the “opportunity” is presented as urgent, Again, gather information, but don’t let yourself be sold on anything at this stage

Step 5: Compare and Refine

By following these steps, you should easily be able to create a shortlist of at least ten possible franchises. In fact, you’ll probably end up with a lot more. But sorting through the mass of franchises you’ve found, Your problem at this stage may not be finding enough suitable opportunities

And try to cull the list to something manageable, So the final step is to review what you’ve gathered. In the next tutorial, you’re going to learn how to research individual franchises in a lot more depth. So you don’t want to be looking at dozens of different franchises, It will involve a significant amount of work

Go back to your initial criteria, and compare them against the data in your shortlist spreadsheet. Which franchises tick the most boxes. Be ruthless in weeding out anything that doesn’t quite fit

Your goal should be to reduce your overall shortlist to about ten names. Sorting the list in order of preference, so that you know which ones to start researching first, Also try to prioritize them

As you’re attending expos and reading articles online, it’s easy to get swayed by particular opportunities that weren’t in your initial thoughts, but sound too attractive to miss out on. Although it’s fine to be open to new thinking, it pays to evaluate every opportunity against the criteria you set out to begin with. But are they right for, Those new ones you heard about may well be excellent businessesYou

Next Steps

Both online and in person, In this tutorial you’ve learned how to find good franchise opportunities. So that you’re clear about what you’re looking for and don’t get sucked into something that’s not suitable, You’ve seen how important it is to start by defining your criteria. You’ve found some useful resources for generating ideas and finding the data to fill out your shortlist. And you’ve done a quick comparison of the franchises on your shortlist to keep them to a manageable number and prioritize them for further research

The next step is to look into those priority franchises in more depth. Do more digging, The information you’ve gathered so far is a good start, but you’ll need to ask lots more questions, and really get a deep understanding of the details of each business before you invest. You’ll learn how to do all of that in the next installment of our series onBuying and running a successful franchise

Read more: How to Find Good Franchise Opportunities

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