4 Questions about Franchising
1. What is a franchise?
It is a license to use a business system that someone else has developed. There are over 3100 different franchises. The best franchises have powerful business systems that can manage, and even thrive in tough times.
2. How can I know which franchise is good for me?
Is the franchise providing a product or service that is NEEDED? Your business should be relevant in a thriving economy, or a tight one like we are experiencing now. If the franchise has been around awhile, the brand recognition can really help bring business to you. Also, if they have strong systems and support in place, this can really help you get your business up and running.
Equally important, you have to know yourself: who are you, what can you do in terms of skills and abilities, what do you want (your business goals), how much capital do you have to invest, how soon do you want to be in business, and how does your spouse (if you are married) feel about this adventure?
3. How are the franchisees doing?
This is the critical question! Ask current franchisees how their business has changed since the economy has changed. Do they see a difference in revenue? Have they had to change the way they run their business? How are they reacting to the slowdown?
How is the franchisor’s office supporting franchisees through this time? If the franchisees have been affected by the current financial trends in the US, what is the franchisor doing to help them survive? Some franchisors have reduced royalties or offered special promotions to try and increase business at the franchisee level. Find out if the corporate office is trying to come up with ideas to help until this downturn has reversed.
4. Does the franchise system offer financing, or does the franchise have arrangements with financing sources?
Some franchisors offer financing to qualified candidates. This can help get the money you need if banks are not willing to lend to you right now.
Additional insights are available at our workshop on Franchising on Tuesday June 30. More information on this Franchising Workshop