Franchise Opportunities are a challenge for first time buyers
One of the largest shopping malls on the planet is made up of franchise opportunities. While nobody has an accurate number, experts agree there are over 2,500 different concepts on the market at any given time. Hence, the options are pretty much limitless and that leads to confusion for buyers. While it’s normal to consider one concept after another, most buyers don’t have a plan for evaluating franchise opportunities. And that’s the problem: without a plan, the process of elimination and selection is just too confusing.
On the other hand, salespeople and brokers representing franchise opportunities have a very specific game plan. Their experience and knowledge represent an edge. Regardless of a buyer’s education or past successes, unless experienced in franchising, they are generally vulnerable in at least two areas: 1. they can’t choose among types of franchise opportunities because they haven’t defined themselves in business, and 2. they don’t consider professional franchise due diligence to even the playing field.
Buyers must know what they want
Franchise buyers generally don’t know what they want. That’s obstacle number one. The shear volume of franchise opportunities is overwhelming. Buyers don’t know what to put on a short list and what to discard. This is why the best salesman with the best bait can sell a franchise that isn’t remotely close to what the buyer originally thought they wanted. Have a personal plan that focuses on yourself and your needs first. Otherwise you can easily be swayed to making a bad decision.
It’s imperative for buyers to study themselves and know what they want before wandering into the forest of franchise opportunities. There are plenty of self-help books on getting to know ourselves regarding career choices. If you are wondering about personal direction, go to the bookstore. There is also another option for gaining insight into your entrepreneurial self – The Focus Program for Emerging Entrepreneurs. You might find it useful.
Searching out franchise opportunities is all about franchise due diligence
2. Having knowledge of ourselves and what type of business might best suit our skills, finances, and interests is a major step toward eliminating vast numbers of franchise opportunities that may have confused our search without that information. However, even with blinders on, you will identify many franchise opportunities that meet your guidelines of interests and cost. You should know that there are over one hundred fields represented in franchising (food, printing, cleaning, automotive, retail, repair, etc.) and each field of franchise opportunities has multiple brands or offerings. So what do you do if you’ve narrowed your choice to pizza franchises and find at least 20 possibilities? You chart out a plan for franchise due diligence.
There are a few ways of going about this. Books and the internet have recommendations for investigating franchise opportunities, and there are attorneys and consultants capable of helping you. (Caution: if you use a franchise broker (who wrongly call themselves franchise consultants), that person is working for a commission.) Your franchise due diligence started with you and your needs. That should remain your number one concern. Following that, create a checklist and put all chosen franchise opportunities through the same process: costs, years in business, people, marketing, training, support, satisfaction, size, disclosure, financial representations, franchise agreement, term, territory, litigation, bankruptcies, management, and of course, fees. Those are good opening points of discovery and there are many more. If you don’t understand them now, begin your education.
You will never regret performing due diligence on franchise opportunities, but you will regret not doing it.
Buyers must have a plan that includes both knowledge of themselves and their skills, as well as a method for investigating chosen franchise opportunities. Examine the potential relationship with a franchise unemotionally to make the best decisions. Think about searching for franchise opportunities in terms of selecting a friend, a partner or a mate. Emotions must take a second seat to objective analysis. Most buyers skip right past franchise due diligence and for that mistake they may pay a big price later on. See Buying a Franchise for more information on proper mindset and process when searching franchise opportunities.