Setting your own schedule. Being your own boss. Taking control of your professional and financial path.
These visions float through the mind of many individuals feeling stuck in their current careers. They view the world of franchising as their ticket to running their own business and enjoying the freedoms of entrepreneurship.
If you have identified becoming a franchisee as the next phase of your career path, below are three steps to identifying the right franchise.
1) Recognizing Your Motives
Many life circumstances lead individuals to pursuing operating a franchise. Some want to seek new endeavors in retirement. Others tried to run their own business unsuccessfully. Some want to escape the trap of their 9 to 5 career.
Related Article: Choosing a Franchise: Think Like a Customer
More important than what leads you here is identifying your motives for the transition. This will define the way you select and evaluate prospective franchises.
I break motives into three main categories:
Earning Potential
Selection here hinges almost entirely on earning potential. While you would like to find an industry you enjoy, your motives revolve around creating a substantial income for you and your family. Individuals here don’t have schedule limitations and are driven by the ability to create returns.
Often times you will find businesses that emphasize:
- Growing markets
- Automation
- Digital elements
Industry Selection
Industry motivated franchisees choose based on interest. Individuals look to leverage their passions through a proven business model. This may look like a fashionista pursuing retail or an animal lover opening a doggy day care.
Sometimes you find people who have fallen in love with a specific store or product and want to further the growth of that specific model.
Schedule Flexibility or Design
Here you pick a franchise either for the flexibility of the scheduling or because it matches the lifestyle you want. Different industries have different hours. If you are looking to be free in the evenings and weekends, don’t look at restaurant or retail options. If you desire flexibility, then a consulting or tutoring model might give you the freedom to select your schedule.
There are thousands of different franchises in the market. Each fit into at least one, if not more, of these categories.
2) Identifying Options
Once you pinpoint your motives, you can explore options that fit what you’re looking for. There are franchise directories or brokers that can facilitate this process.
Knowing your ideal franchise parameters, as identified in step one, will help narrow your focus and speed up selecting options for step three.
3) Due Diligence
Next to running the franchise, this will be the most extensive process. Consider due diligence as the most extensive research project you’ve ever completed.
The entry cost franchises, combining the franchisee fee and initial startup costs, can range between $20,000–$1,000,000. This is not a decision, or step, to be taken lightly.
You will want to know the franchise inside and out before signing on the dotted line.
Further down the line in your vetting process, once you have identified a model to move forward with, you will gain access to the Franchise Disclosure Document (FDD). This comprehensive document includes 23 mandatory disclosures outlining different facets of the franchise. With the help of both your financial advisor and attorney, you will be able to dig into the financials, legal disputes, growth and more of the franchise.
Before you get to that phase, you will need to research different options and reach out to operators. Franchise consultants can help with this process. Sometimes they have different reports on popular franchises, revealing both the pros and cons of the organization. The benefit to a franchise consultant comes from their unbiased view. They are typically paid a flat fee for their service, unlike a broker who receives a commission on the sale.
*Many franchise consultants try to navigate the legal elements of the FDD with you. While they will have valuable input, you need a qualified franchise lawyer to ensure you are protected in your new investment.
Closing the Deal
This brief outline skims over the steps of an extensive process. Purchasing a franchise will be a considerable investment. While there is a proven business model, no franchise sees success without hard work. Ensure that your selection will be something you can dedicate your energy and career too.
As mentioned above, when you move through the final stages you will gain access to the FDD. Traditionally this falls after you have selected your franchise, completed due diligence and done an onsite discovery day with the parent company.
It is the final stage before purchasing your franchise. Ensure you have the best legal foundation as you start your new endeavor through working with an experienced franchise attorney. They will be able to spot illegal or unusual clauses that could be harmful down the road. They are also your guide to the inner workings of the organization, and fully understanding all aspects of what you are agreeing to.
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