Franchising is a great way to achieve the freedom of business ownership, while also being able to rely on the support and guidance provided by the franchisor. This means franchising is the right route for entrepreneurs who want to secure a steady income with relatively low risk, while still having the freedom and satisfaction of independent business ownership. This is possible when you invest in a business that’s part of a solid franchise concept, with a proven brand and history of success.
The first, and arguably most critical, step in making a franchise purchase is determining which franchise system will be the right fit for you. With hundreds of different available franchise opportunities, you’ll have your work cut out for you in narrowing the options down to those that will be best suited to your specific skill set and aspirations.
Gary Prenevost, President of FranNet, Southern Ontario, suggests starting this search process by determining what you can bring to the franchising table. “It’s really important that people start by building their own ‘ideal business model,’ which will identify their core skills, interests, and abilities; the resources they can bring to the business, including time and money; and the short-term and long-term financial and lifestyle goals they want to achieve through business ownership.”
Narrowing your search
Breaking it down, to build your ideal business model, you will need to:
- Assess your abilities and interests. Before you even start looking into specific franchise opportunities, you should carry out a self-assessment to identify your strengths and weaknesses. This will help you decide whether a franchise system will be best suited to your particular needs and abilities. Take stock of the qualities, education, experience, and skills (organizational, leadership, etc.) you can bring to a franchise business.
Take the time to strongly consider your passions, so you can translate this passion into business success. For example, if you love animals, you may want to consider a pet grooming franchise. You should also rule out franchises based on these passions; if there’s something you don’t have any interest in doing, you can remove it from your list right away. It’s important for you to be passionate about the franchise and the sector it inhabits, as you’ll be investing a great deal of time, work, and money into this business, especially during the initial six months.
- Come up with a short list. With your self-evaluation in mind, you’ll want to create a short list of franchise systems that you want to investigate further. When coming up with this list, remember to be open to different types of opportunities, considering a variety of industries and investment levels before narrowing down your selection.
To help these franchises get to know you, you should fill out an application form that will help them learn what assets you can bring to their system. The form will likely ask for your name and contact details, along with background information such as past experience, skills, and financial details.
All franchises should be judged based on how well they line up with your goals, preferences, wants, and needs.
- Evaluate your finances, and set goals. Before you plunge too deeply into your franchise search, you should also be sure to draft a business plan, outlining your career path and short-term and long-term financial goals. You’ll also need to take a hard look at your current financial situation – you’ll need to determine your net worth and assess whether your assets are readily available (unencumbered) or tied up in other assets. An accountant who specializes in franchising can help you evaluate your finances to determine whether you have the resources you need to finance the opportunities on your list. (Additional information about franchise accountants and other support services can be found throughout this Guide.)
- Conduct thorough research.Once you’ve completed this self-assessment, it’s time to move on to the research stage. “You should begin by looking at two to four franchise options that fit your model, as this will enable you to gain a deeper understanding of which business would be the best fit (versus only looking at one at a time),” explains Prenevost.
When researching the few franchises that meet your goals, ambitions, and ideal business model, you should follow a number of steps. During the first two to three weeks, you should learn as much as possible about the franchise. You should be in frequent communication with the franchisor, and should receive information such as marketing material, the franchise agreement, and disclosure documents. By the end of these first weeks, you should completely understand your duties and responsibilities as a franchisee, along with the standards you’ll be expected to meet.
Once you’ve completed the initial research phase and have narrowed down your franchise options, you can move on to the next steps of the research process, where you will review the franchisor material and become fully immersed in the due diligence process, which includes meeting with the franchisor, current franchisees in the system, and franchise professionals.
- Remember to take your time.Before you move on, remember that when you’ve found the franchise options that speak to you, it can be easy to get caught up in the process. You may want to get through the steps as quickly as possible so you can get down to operating your franchise business, but Prenevost advises that no matter what, you should take your time to do it right.
“Do not rush this process! You should allow yourself eight to 12 weeks of active research (10 to 15 hours per week) in order to reach the level of understanding you need. You should also involve your spouse or partner in the research process as much as possible, even if they are not going to be involved in operating the business.”
Advice from a Franchisor
Michael Gazer, President of Heart to Home Meals, shares his top three tips to help you make the right franchise decision.
- Take a chance. Traditional job trends are presently in a state of upheaval. A study out of Oxford University is predicting that all developed nations will experience job loss rates of up to 47 per cent within the next 25 years. Experts are warning that the whole concept of employment is about to change, and that the trend is irreversible.
This means that all of us have a responsibility to take a fresh approach towards work and how we evaluate opportunities. Those seeking a change midway through their working lives may see buying a franchise as a chance to have more freedom and work with the people they want.
- Do your research. You need to take the time to fully explore all of the opportunities that match your strengths and interests. While it is true that being a franchisee is hard work, the effort you put into selecting your business is the most important part of the whole process. You need to find something that speaks to you.
- Be methodical. You need to think through your decision to purchase a franchise – this is not an impulse buy. You can’t launch your career after a quick chat over coffee with a close friend; this decision needs to be measured.
If you have a family, the impact on them is important to consider, so you need to challenge yourself and urge others to challenge you. Ask yourself earnest questions about what you want from this position and what you have to offer.
For anyone starting their own business, it’s great to do something in which you are skilled and you are passionate about. But, it’s also nice to know that your business is going to survive in five to 10 years because the market is there to support your service or product.
CFA Resources Can Help You Find the Right Franchise Opportunity
CFA has a variety of valuable resources to help you learn more about franchising and to help you find the ideal franchise opportunity, from FranchiseCanada magazine and Directory to The Franchise Show and other seminars and events.
LookForaFranchise.ca, the online directory of hundreds of CFA member franchise brands in more than 50 categories, is another major asset for prospective franchisees, with the ability to contact franchisors directly via an online form, and each listing outlining important information about franchisee fees, investment requirements, and expansion areas.