7 minute read

How to Research Franchise Opportunities

The journey to franchise ownership is non-linear. Most people begin by searching online and may engage with a few brands, but then they table the idea for the future. The reason this happens so often is due to the lack of a clearly defined process when researching franchise investments.

Think about it, investing in a franchise, signing a 10-year agreement, investing a significant amount of your time and money, is a big deal! It’s not a simple decision that should be made based on emotions. It also has the potential to change your life and create wealth and prosperity for your family and future generations. A decision of this magnitude warrants a solid investigation process. Not simply to protect yourself, but also to ensure that your search doesn’t get derailed to the point where you simply end up doing nothing, and miss out on a tremendous windfall for you and your family. So, when considering franchise ownership, what should the research process look like?

Begin With a Self-Assessment

The best way to begin any lifestyle decision is to be introspective. Review your work history, your likes, and dislikes. What is your work style? Do you like to work in a fast-paced environment with a lot of colleagues around, or would you prefer to work from a quiet office at home? Do you have any special knowledge or skill set that will give you a significant head start with a certain business? Be sure to focus on what are you good at, not your hobbies. Business ownership should give you the lifestyle to pursue your passions, it doesn’t have to directly BE your passion. Passion in business comes from finding a role that you are good at, so that you will find success, and want to do it over and over. This is what will get you out of bed every morning! There are many tools that franchise consultants use to help their clients consider these things. Personality assessments are great, but working with a dedicated consultant to help you unpack this information and digest it is your best bet.

Get Your Finances in Order

Starting a business on a wing and a prayer, going “all-in” and having your back against the wall may be the stuff that movies are made of, but that’s not a smart strategy to succeed as a franchise owner. The reason why businesses choose to franchise their model is to open their brand and intellectual property to others who have the capital to grow the brand faster than they could do it on their own. Just like when you bought your first home or car, it is important to be able to present yourself as a qualified buyer.

Franchising is a two-way street. Brands need franchisees to spread brand awareness and operate local units, and franchisees need franchisor support to give them the playbook to get their business off the ground and teach them how to scale. But it is the franchisor who awards the licenses, and good franchisors are discerning on handing over their playbook to just anyone. It is common these days to speak with a lender early and often in the franchise due diligence process. If you are working with a registered franchise consultant, he or she should connect you with a lender to understand your financial qualifications even before discussing specifics about franchise brands or business models. Being transparent about your finances with your consultant will enable them to narrow your focus of brands to 2 or 3 that meet your needs, wants, and desires. Again, just like when you were shopping for a car or a home, if you don’t know how much you can afford, why are you even looking?

Dive Into Discovery

As mentioned above, franchising is a two-way street. This is a business relationship where you will be closely connected for many years. You should treat your due diligence process the same way. Solid franchise companies will not chase you or drag you thru a process. There is also no reason to “lead someone on” and allow them to think you are interested in their business model when you truly have no intention of pulling the trigger. No one is asking you to sign a franchise agreement on the first call, but a healthy amount of information exchange will happen over the course of 30-90 days, which should arm you, and the franchisor, with enough information to make a smart decision. The first rule of discernment is knowledge, so drop the pre-conceived notions, listen, and learn. What you find may surprise you! Set a reasonable timeline to make a decision, yes or no, and commit to it. A typical franchise due diligence process will take 8 weeks to complete, so don’t say “no” too soon! Give yourself time to gather all the information, but it’s also unnecessary to drag things on forever. At some point you need to have that “ready, aim, fire!” mentality if you are going to be able to succeed as a business owner.

Make Validation Calls

The best part of a franchise discovery process should be talking to existing franchise owners. These individuals are the boots on the ground. They are the local business owner, providing jobs and sponsoring Little League teams. They are what you are aspiring to be! It’s very important to understand the role of the owner in the business and to ensure that you are a good fit for that role. This is what will get you excited to go to work every morning. Use your validation calls as an opportunity to get true insights from those who are living and breathing this business every day. It is imperative to participate in this part of your due diligence. How many owners you need to speak with is a personal decision, but from my experience, 2-5 should give you the information you need to understand what the day-to-day looks like, what the organizations culture is like, and is this the type of network that you would like to be a part of.

Engage the Help of an Advisor

I have mentioned this throughout, but I cannot overstate the importance of working with a qualified franchise consultant to assist you with this process. Franchise consultants help by taking the time to get to know you and helping you get to know yourself. Opening you up to franchise opportunities that perhaps you never even knew existed. Connecting you with support systems such as attorneys, lenders, CPAs and more. They will be a second set of eyes, and a third person who will hold you accountable to timelines, and information exchange that need to happen to help you achieve your goal of business ownership.

Don’t Second Guess Yourself

For various reasons, few people actually achieve their dream of becoming a business owner. In many cases, it’s because they are in a constant state of trying to find the “perfect time” to take the leap. Unfortunately, if you are still waiting for the “right” time to come along, that time may never come. The truth is, there is no “perfect time” to start a business. If you complete a solid self-assessment, get qualified financially, take your discovery process seriously, and make validation calls, all with the help of a trusted advisor, you should feel well prepared and confident in your decision. The best franchise owners follow a process, then take action and invest in themselves so that they can make a difference in the lives of others. Are you ready to act?

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