18 Steps to Franchising: Process of Elimination

Make 2015 the year you become your own boss. Here’s everything you need to make your due diligence culminate in a franchise.

18 Steps to Franchising: Process of Elimination

1. Decide if you want to continue this process on your own or get assistance.

You can get help at any time, but it’s best to decide immediately after you complete the personal evaluation whether you want to.

2. Establish the maximum investment criteria.

Let’s say you identify your maximum investment level as being R1,2 million. Making that one decision can eliminate some of the available franchise opportunities.

3. Establish the employee criteria.

Let’s say you don’t want any minimum wage or unionised employees — again, that would allow you to quickly eliminate a majority of franchise opportunities.

4. Establish the hours of work criteria.

5. Establish the selling aptitude criteria.

6 . List these four criteria

(maximum investment, employee criteria, selling aptitude and work hours) that you’ve established on paper for easy reference. Look at industry segments first rather than individual companies. The four criteria you identified in the previous steps should allow you to quickly narrow down the total possibilities by 95% to 99%.

7. Do an initial scan, looking for completely obvious financial eliminations.

If, for example, all the restaurant chains have investment levels of over R2 million, and your maximum investment potential is R1 million, you don’t need to spend any more time on that category — just cross it out and move on. Skip over any miscellaneous categories for now too.

8. Do a second scan of all the segments and think about the employee situations in those businesses.

Figure out if they’re complete disconnects with what you want. This shouldn’t take more than a few seconds for most of the industry segments — again, just skip over any miscellaneous categories.

9. Take a third look at the remaining industry segments while thinking about your selling aptitude and hours of work criteria.

This may take a little more time than the first two elimination steps, and it’s possible you might not know the answer to one or the other without more investigation. That’s fine — if you’re not sure about a segment, don’t eliminate it for now.

10. Go back and look at each company in the miscellaneous categories, repeating steps 15, 16 and 17 for each one.

Cross off any eliminations you can make on a company-by-company basis.

11. Now review the remaining possibilities one last time.

At this point, take time to really think about the industry segment or company. Do you have any status issues? Do you have any other considerations that might eliminate these as possibilities? If so, eliminate the concept or group and move on.

12. Make a list of the industry segments and/or companies that made it this far.

Split the list into two categories: One that meets your initial criteria and one that you need more information on.

13. Do some quick research on all the industry segments on your second list.

Look for the answers to any outstanding elimination criteria questions so that you can either move the industry segments to the first list or get rid of them. You can usually find what you need to know on the Internet by searching the first couple of companies listed in the category. Follow this process until everything on the second list has either been moved to the first list or eliminated.

As a general rule of thumb, at this point you should have narrowed down the franchise universe to a playing field consisting of a few industry segments.

The further we go in this process, the more time-consuming it becomes, so we want to be as efficient as possible in further narrowing down the list. We’re now going to try to identify representative companies in each remaining segment to decide whether to go further with the entire segment

14. Pick a representative company to examine.

Let’s say one of your remaining segments is a fitness business, and you had identified from your source data that there were at least five different franchise companies in the segment. What you need to do now is pick the company you think should be representative of the segment.

Here are two good criteria for selection:

  1. Assuming the list you’re working off has company growth data, pick a company with strong growth compared to its peers.
  2. If there is an 800kg gorilla in the segment (a company that’s way bigger than the others) don’t necessarily pick that one; it may not be a realistic sample of the current growth potential possible for you to achieve.

15. This is your initial company target list.

Go to the website of each of the representative companies you’ve selected and take the time to carefully review their information. Remember, what you’re looking for at this point is anything that turns you off about the segment, so it can be eliminated. Assuming you don’t find any such negative information, fill out their request-for-information form, because it’s finally time to start talking to franchisors.

The process of looking into any franchise opportunity is primarily one of mutual elimination. Just as you don’t want to waste your time on a franchise that isn’t going to work for you, franchisors don’t want you to waste their time either.

Consequently, while you’re asking them for information, they’re going to be asking you for more information about yourself. The following steps are typical of this back-and-forth processes.

16. You submit the initial request for information to the franchisor, most often online.

To move through this stage more quickly, type one or more questions into the comments section of the enquiry form (for example, ask if your desired territory is available).

17. Once your validity has been confirmed, the franchise company should provide you with a fairly broad overview of information about the opportunity, along with a request that you fill out a questionnaire.

The information you receive may be in the form of brochures, videos or additional web-delivered information. Most franchisors’ questionnaires are basically the same and consist of:

  1. Your contact information
  2. Your professional experience
  3. Your financial qualification information
  4. Questions about why you want to become a franchisee and what you hope to accomplish by doing so.

18. After the franchise company receives your questionnaire or interviews you telephonically, it’ll evaluate your answers and decide if there’s a possibility for you to do business together.

If there is, the company usually ramps up to a fairly intense process of communication designed to provide both parties with all the information they need to make an informed decision about whether or not to work together.


Jeff Elgin
About the Author
Jeff Elgin has developed a consulting system that matches pre-screened, high-quality prospective franchisees with the franchise opportunities that best fit their personal profile.

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