Opening a franchise business is not for the faint of heart. It is indeed a family decision that requires a lot of preparation, planning and self-assessment.
The entrepreneurial process requires that you evaluate the decision personally, sociologically, organisationally and environmentally.
- Degree of Achievement – Degree of Commitment – Entrepreneurs are more involved.
- Risk Tolerance – Loss of Employment = Loss of Control
- Risk taking
- Personal values - Age considerations
- Experience – Do you have what it takes to be an entrepreneur? Are you procrastinating or are you decisive? Are you dedicated to a project when you decide to go ahead?
- The devil lies in the details. If you are planning to start a new franchisor business, it is better to be detail oriented.
- Family – Sacrifice and Covenant
- Children – Loss of time with children
- Models – Mentors and Vision
- Franchise against business opportunity
- Strategy – Advantages of the franchise prototype against trial and error
- Structure – Franchise or New Business
- Product or service based
- Competition – Competitors in the local market
- Providers – Franchise Against New Business
- Resources – Bankers, Lawyers, Investors, Friends and Family
The franchise universe is composed of thousands of franchise systems in hundreds of industries. Are you the perfect entrepreneur for a fast food franchise or restaurant and casual? Do you see yourself in a retail environment of products or services or are you more comfortable in a service business managing a team of skilled workers?
Whatever franchise company you choose, you will have to spend hours and hours researching and evaluating the desirability of the franchise opportunity.
It all starts with an orchestrated survey from a franchised web portal or through a keyword search in Google, Bing or Yahoo. It can come from a reference from an associate or a Facebook advertising advertiser promoting a particular franchise. Whatever it is, validate your decision with the search.
You could end up with several days of discovery for different franchise opportunities. A day of discovery is an intimate and personal meeting with the franchisor team. The people with whom you will deal daily if you decide to buy a franchise. Generally, the day of discovery is held at the company's headquarters and can take more than one day. Sometimes, the franchise will pay some or all of your expenses to attend their day of discovery.
Evaluation of Financial Performance
If your initial communications with the franchisor indicate that you can be in good shape, they will ask you to complete a request for consideration or application for a franchise. If you decide to do so, they will send you a copy of the franchise disclosure document or FDD. Here you will find virtually all the information you will need to validate a smart choice in franchising.
Item 19, Financial Performance, may detail the financial performance of the company's units or a specific number of franchise units depending on the term.
The best resource for determining financial performance is talking to current franchisees. The FDD will include the names and phone numbers of current and even existing franchisees.
Selecting a franchise and applying for funding
At this point you have decided on the franchise activity for you. To obtain financing, you will need a business plan. Your plan should include a summary, analysis of the industry, customers and competitors, the description of the company and the product, the marketing plan, the operating plan, the development plan, risks and financial plan.
Sign the Agreement
My recommendation would be to seek the advice of a franchise lawyer to ensure that the negotiations are all on the agenda.
Recruit your team and participate in a training
The size of your team will depend on the franchise you have chosen. Sometimes the franchisor will train additional members of your team for free and sometimes they may charge extra fees.
Open your franchise
The franchisor will help in the official opening of your franchise business. You want to alert customers in your territory that you are open for business with posters, promotional ads and other marketing initiatives.