Choosing a Franchise

Choosing the right business franchise can affect your success. Learn how to choose the right franchise for you.

Tutorial

With 95% of businesses failing in the first five years, selecting the right franchise is essential to your success. There are a lot of factors that you should consider before selecting a franchise.

Do what you love!

The first and biggest factor is finding a franchise doing something you love! If you love to cook, find a restaurant. If you like to clean up, select a carpet cleaning or maid service. Do not assume that just because you own the franchise that you won't have to work it, you will have lots of times where an employee won't show up and you will be doing their job. Doing something you love will make the hard work and long hours bearable!

How much do you have to invest?

Franchises can be very expensive to start. There is a franchise fee, build out costs, training costs, and more. Ensure you meet the minimum net worth of potential franchisors and that you have the capital required to start the franchise and operate a year without any income. Most new businesses are not profitable in year one, and some not in year two. Be prepared to work long hours for little or no pay. If you are going to take out a loan to start the business, find out how much you can be preapproved for.

Where are you going to setup shop?

Most franchisors limit the areas they put locations in to allow the franchisee exclusive rights to an area. If you want to stay in your current town, you may be limited in which franchise you can select.

Talk to a franchise owner

Offer to buy a franchise owner a cup of coffee and find out the inside scoop. Can you make money? Is training adequate? How about support down the road - is the franchisor there for you? Do they enjoy the business? Is there a clear exit strategy when they want to leave the business?

Research, research, research

Do plenty of research on the business before spending a lot of money. Find out how much you have to pay the franchisor each year, what advertising budgets you are required to invest in, and any on going costs. Find a franchise you love and go for it!