How to Select the Right Franchise Business
Find the Best Franchise Opportunities Before Buying
Oct 21, 2009
The decision to buy a franchise is influenced by factors including the cost of the fees and royalties and the value of a franchise's customer recognition and tested business model, but once an entrepreneur knows franchising is right for him or her, it's time to start shopping. Thousands of franchise concepts are available to wanna-be franchisees. Many websites including franchise.org have features that list the fees and estimated start-up costs for new and established franchises.
Franchise Trade Shows
One of the best ways to shop for specific franchises is to attend one of the trade shows held each year. It can be a great way to go because everything is under one roof. Potential franchise owners can walk from booth to booth and learn more about what companies are offering. It is important to determine the type of franchise that best fits someone's personal interests, investment size and goals before the exposition. The trade shows provide a way to comparison shop, but an unprepared buyer will find it harder to avoid salespeople selling franchises they’re not interested in.
While listening to the exhibitors’ presentations, pay attention to how many outlets already exist and where they’re located, what fees and royalties are required, how long the franchisor has been around, what support and training is offered, and what restrictions the franchisor imposes.
Major franchise trade shows include:
- The International Franchise Expo in Washington, D.C.
- The West Coast Franchise Expo in Los Angeles
- Franchise Expo South in Miami Beach, Fla.
- The Franchise Show in Toronto, On.
Online lists of franchises can also be a jumping off point to begin contacting companies. Look for a gap in the local marketplace for a particular type of service. If a potential buyer has experienced a franchise that isn’t available where they live, it might be an opportunity to bring it to an underserved area.
Also, choose a product or service that’s compatible with the business owner's interests. If someone likes working with children, he or she might be inclined to buy a franchise related to children. A hobby, former job or area of expertise could all point to the right franchise.
Researching a Franchise Agreement
But the most important thing to research before signing up for a franchise agreement is the Uniform Franchise Offering Circular (UFOC). It contains 22 points of disclosure, including the franchisor brand’s litigation history, bankruptcy history and names and telephone numbers of current and former franchisees. Calling those who have left the system can be particularly useful as they have no reason not to speak freely about a bad experience.
In the U.S. all franchisors are required to have the UFOC disclosure document available to prospects. Contact the franchisor for a copy. Going over the contract with an attorney is recommended.
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