1. We’ll begin by answering the most basic questions of all:
- Why do you want to own a franchise?
- Do you seek the freedom and autonomy of business ownership?
- Do you see franchising as a way to use your skills and experience to create greater personal wealth than you have been able to earn in the corporate world?
- Do you have specific lifestyle expectations for business ownership?
It’s essential to have a clear idea of why you want a franchise and what you expect to accomplish by owning and operating one.
Write your answers in detail so you can refer back to them as you progress in your franchise research.
2. Now that you know why you want a business, let’s take a moment to make sure a franchise makes sense for you.
Most people list the main advantage of a franchise as the reduction of risk, since you should select one with both a proven operational system and a good brand. Keep in mind, though, that there’s a trade-off for this increased security.
As a franchisee, you’re required to operate your business in a specific manner (the proven operational system), and you need to be comfortable with the franchisor telling you how you’re going to run your business.
If you have a stronger entrepreneurial personality and want to innovate and fly by the seat of your pants, a franchise isn’t a good choice for you.
3. Let’s spend a little time thinking about where you want your business to be located.
Do you want to stay right where you are or relocate? If your ideal business is sold out in your first choice of location, will you accept a territory a little further away?
We’re not looking for a specific cross street here – just a general market area. Many people find it helpful to determine a maximum driving distance or commute time that will identify potential locations of interest.
4. Now it’s time for us to form an opinion about that four-letter word that starts with an ‘s’: Sell.
In many franchises, the most important role of the franchisee is to hustle up business by selling to customers, so we need to determine where your comfort level is with regard to selling.
Some folks are perfectly at ease cold-calling strangers or going door-to-door to solicit business. Others can’t imagine doing any selling except perhaps helping customers from behind a retail counter.
Most fall somewhere in the middle. Rate your comfort level with sales activities on a scale of one to ten.
5. We also need to determine your comfort level with managing employees.
Most franchises have employees, but the number and characteristics of the employee base varies considerably. Will you be comfortable managing a large staff compliment, or should you be focused on businesses with very few employees?
Does it matter to you whether they’re skilled or unskilled workers? This is an important step for you to think through – your answers may eliminate many franchises from your consideration.
6. At this point, it’s important to consider lessons from your past work experience and your general thoughts about any status or ego issues that may be related to potential businesses.
- What work have you liked doing the most and the least in your previous experience?
- What are your strengths?
- What are your weaknesses?
- What types of tasks do you never want to have to do again?
- What hours of the day and which days of the week do you want to work?
- Finally, how important is it to you what the neighbours might think?
The fact is that a lot of very successful franchises aren’t glamorous except in their results, and you need to decide whether to consider such opportunities.
7. It’s time to rate your financial situation.
Make a list of the current value of all your assets (things you own) and all your liabilities (things you owe). When you subtract the liabilities from the assets, the difference is your net worth.
Carrying this process one step further, you need to determine the current value of all your assets that are either cash, or can be converted to cash fairly easily (including assets such as stocks and bonds, retirement funds and home equity).
This cash or cash-equivalent number is called your liquidity or liquid assets. You’ll need to know this and your net worth when buying a franchise.
8. Now it’s time to organise the information…
We’ve gathered in the preceding steps into a format that we can use to evaluate potential opportunities. You need to create a narrative for yourself that defines the most important characteristics you want in a franchise.