How can you make sure to learn what you need to know about franchise business opportunities you’re considering?
Look into the company
Franchisors offer information in many ways, but your research about the company should go beyond accepting what the company gives you. Fortunately there are now many sources of information when you want to find out about a business.
Check them out online. Google their company name, of course, but look for the people you’re working with at LinkedIn, check the company on sites like Spoke and Manta, and examine their corporate website.
Then use Google to seek out the bad news. Try searches combining the company name with “complaints” or “negative reviews.” Finding complaints doesn’t mean the company’s a bad one—you really can’t please everybody. But you can find the possible risks you should look at more deeply.
If you’re not sure that you can understand all the data you find, get an accountant to check it out for you.
Talk with franchisees
You only get a limited time to talk with franchisees, one survey respondent said. In hindsight, he felt that he hadn’t done the best job of getting the info he needed. That experience provides a great tip: set aside enough time to have as many conversations as possible. Plan your questions ahead of time to get the most from those discussions.
One of the things respondents most often cited as something they wished they had asked more about? Money. It can be hard to bring it up, but you need to ask about costs and income. Many of the franchisees in the survey had expected to make more than they did, and to start making money sooner. Many were surprised by the costs. It’s important to have a realistic idea of the costs of doing business.
If you haven’t been in business before, think about talking with other businesspeople, too. Plenty of people go into business with unrealistic expectations about finances, and you don’t want to be one of them.
Talk with customers
Many franchisees are customers of the franchise they choose. Often, they love a particular franchise and want to bring it to their neighborhood. Even if that’s your experience, try to talk with some customers. If you live far from the nearest franchise and mostly visit when you travel, you might not be their typical customer at all.
One of the people surveyed reported that he had talked with friends about his idea, and they had been enthusiastic—but hadn’t actually bought the product once the franchise was open. The number of people who like an idea will always be greater than the number who will actually make a purchase, but talking with people who do patronize a particular company will give you insight into the kinds of customers you’re likely to deal with.
You can find out their income levels, the things they like and dislike about the company, why they choose it over competitors and how often they visit. You may find it eye-opening.
This article was originally published by America’s Best Franchises