Author Topic: How to choose a franchise  (Read 1383 times)

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RichPoorDad

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How to choose a franchise
« on: May 09, 2012, 05:08:56 PM »
I'm sharing this to all people who wish to franchise... Just to give you some ideas.

How To Choose A Franchise
By Janet Attard

You'd like to go into business for yourself, and believe that the best way for you to become your own boss is to buy a franchise. You know it will takes time and money to be successful, and that's OK. But which franchise should you buy? Which makes the most sense for you?

Here are some criteria that can help you make your decision:

1. What products or services would you enjoy selling?
What industries do you like, or dislike? Your best bet is to find a franchise in an industry you know at least a little bit about. All too typical is the case of the Chicago car salesman who decided to change careers and go into business for himself. He bought a basement waterproofing franchise but then found the business boring. He wanted to sell it, but sales weren't as high as he had expected they would be and he had trouble finding a buyer. He was stuck paying off the franchise fee and working at a business he didn't enjoy.

2. How much money do you have available to invest?

The amount of money you have available to invest in a franchise is an important factor. If you've only got $30,000 and the minimum investment for a specific franchise opportunity is $90,000, the opportunity isn't going to be right for you, no matter how much you like the company.

3. What's the total cost of purchase?
The franchise fee won't be your only expense. Find out what you can expect to pay for advertising, training, inventory, insurance, and all other costs in addition to the franchise fee and royalties.

4. How well established is the franchise?

How long has the franchise been in existence? Have they been in business for many years or are they brand-new? How many other franchises have they opened and where are they located?

5. How stable is the franchise?
What is the background of its officers? (Any history of litigation or bankruptcy of the franchise or its officers is supposed to be included in the disclosure document.)

6. What kind of track record does the franchise have?

Have most of their franchisees been successful? Names and addresses of franchisees in your state should be provided before you sign any contract. Call the people on the list and ask about their experiences.

7. What training is available?
Ask what training and support will be provided as part of your franchise fee. Will you get step-by-step instructions and hands-on training? What kinds of manuals and other materials will you get?

8. How close to your store can the franchisor let another franchisee set up shop?

9. Will you be required to purchase supplies or products from the parent company?
If so, compare your cost to the local retail prices of the same goods. There have been instances where the price from the franchise company for goods was higher than the price of the same goods in local retail stores. Selling anything under such conditions would be quite difficult.

10. What do the contract terms say about ownership? Can you sell out to someone else if you wish?
If you want to continue when the contract expires, will it be automatically renewed? Will you be able to convert your store into an independent operation if you should want to?

11. Determine how disputes will be handled should they arise.
Watch for clauses requiring arbitration in the franchisor's home state if it is different than yours. Should a dispute arise, you'd have to travel to that state for arbitration hearings.

12. What criteria does the franchise use in selecting franchisees? Do they do any screening? Or, do they seem more interested in getting your franchise fee?

13. Does the franchise use high-pressure sales techniques to get you to sign on the dotted line?
14. Do you like the people you are dealing with?

15. How big is the market for the franchise's products or services in your area and how much competition is there now?

Janet Attard is the author of The Home Office and Small Business Answer Book.
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How to choose a franchise
« on: May 09, 2012, 05:08:56 PM »

Mountain View

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Re: How to choose a franchise
« Reply #1 on: May 09, 2012, 05:09:25 PM »
I think when choosing a franchise  you need to assert to yourself the field/industry in which you want to engage in... You need to carefully reassess yourself whether you got the skills to do this business. Much better if you can answer these questions for yourself

Step 1:  Do I Really Know Myself?

What are my natural aptitudes, skills and talents?
Am I physically and temperamentally suited for self-employment?
Do I have the ability to work hard?
How will my family be afftected by my decision and the calls the business will make on my time?
Do I mix well with people?
Am I prepared to deal with difficult employees and customers?
Do I possess sufficient financial resources to enable me to start a business and survive while it is struggling to becom established?
Am I able to raise sufficient finance?
Am I prepared to put whatever assets I now possess at risk?
Will the business be sufficiently challenging for me?  Does it excite me?
Am I prepared to handle the everyday details of running a business?
Am I determined enough to succeed?
What do I want to achieve in life?
What am I looking for -
    * Job satisfaction?
    * Capital gain?
    * To earn lots of money?
    * An investment (absentee owner)?

Step 2:  Do I Understand the Business?

1.  Has the franchised business been thoroughly proven in practice to be successful?
2.  Are the products/services new?
3.  Will the products/services appeal to the Philippine marketplace?
4.  Does this business have staying power?
5.  Is it in a growth area?
6.  Is that growth a fad or mere fashion and thus transient?
7.  Is it, alternatively, in an area of decline?
8.  How compet1t1ve is the market for the particular products/services?
9.  How compet1t1ve is the price of the product/service?
10.  Can this compet1t1veness be maintained?
11.  What is the source or supply of the goods?
12.  Will the products need to be imported?
13.  What are the duties and restrictions for any importation?
14.  Are alternative local sources of products/services of comparable quality available?
15.  Are the products/services based upon a trademark?
16.  Is there adequate back-up in terms of guarantees and service facilities?

Source: Business Line Vol. 2 No. 4 2004
A Special Publication for Plantersbank Clients and Friends

PesoRepublic.com | Your smart guide to money matters and entrepreneurship.

Re: How to choose a franchise
« Reply #1 on: May 09, 2012, 05:09:25 PM »

 

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