What is the best franchise to buy?
I get asked this question more than any other by prospective franchisees. A franchise is an unparalleled opportunity to own your own business while mitigating the risk, but how can you figure out the best franchise to buy?
You need to be brutally honest with yourself. What are you really trying to achieve by buying a franchise, and what do you expect to get out of it? For some, owning a franchise is a hobby; for others, it’s a primary source of income.
There are other factors that affect your choice of franchise, from the amount of money you have to invest to the amount of risk you’re willing to assume. It really is different for everyone. Looking at your skillset and professional experience will help you narrow down the kind of franchise that is suitable to buy for your talents, interests and budget.
Get help: use a broker
Franchise brokers match opportunities with prospective franchisees all the time, based upon years of practical experience. They know the market and have a talent for flagging up unusual but profitable franchises that you may not have considered. Of course, you should always check customer reviews and dig into the franchise’s background and check for social proof but an experienced broker can help you think laterally.
The really good news in this industry is that there is the standardization of pre-contract information. Once you have your shortlist, the FTC requires that franchisors provide you with Franchise Disclosure Documents (FDD) in advance of signing contracts. This provides in-depth information for you to perform your detailed comparison, including:
- Initial and ongoing franchise fees
- Rules and restrictions including suppliers, goods and services, staff uniforms and sales area
- Average revenue and profitability
- Training, marketing, advertising and ongoing support
- Franchisor’s history, legal, business plan and financials
Creating a shortlist
Once you start looking for franchise opportunities, the sheer scale and diversity in this incredible industry can seem overwhelming. Knowing exactly what you want means you can eliminate a number of them right off the bat, but then you need to narrow down your choices to find a franchisor who is not only credible but who also shares your values.
A common mistake is to look at valuable franchises as brands, not businesses. But you really do need to think laterally and logically. Dog grooming might sound like great fun, but does it really fit your skillset and goals? Will it offer the growth potential you need and continue to inspire you six months or six years into running the business? If you’re a hardcore dog lover, the answer to that is probably yes. If you’ve just exited a C-suite role in a tech business with vested options and are looking for the next gig, perhaps not.
Here are a few additional thoughts on finding the right franchise.
Location really can make or break your franchise dreams and is another key factor in making the right choice. Unless you want to relocate or adopt a remote owner-manager role, rather than operational, territory matters for you, your lifestyle and your family. The perfect franchise shouldn’t require an insane commute!
Finally, before you join more than 770,000 franchisees in the USA, talk to other franchise owners about their experience. You’ll find their contact information in the FDD. Ask about training and ongoing support, ROI and resale value. Other franchisees will give you the objective lowdown and help you take the right first step to successful franchise ownership.