If starting a business from scratch sounds a little daunting, you might look into purchasing a franchise instead. Franchise businesses have a tried-and-true model that covers everything from branding, to pricing, to marketing.
When evaluating whether to purchase a franchise business, you’re likely to wonder “what’s the best franchise to own?” However, it’s essential to look at multiple factors to be sure that you’re making the right choice.
Evaluating The Best Franchises To Own
Let’s take a look at the five things you need to consider before buying a franchise business!
1. Make Sure You’re Ready
Owning a business of any kind can be an emotionally, physically, and financially draining experience. Before investing in a franchise, be sure you understand why you want to own one.
If you believe that operating a franchise is more accessible than owning any other form of business, bear in mind that all businesses have obstacles.
While managing a franchise business is more straightforward than starting something from scratch, having clear expectations will help you stay on track and manage any ups and downs that may come your way.
2. Study The Field
Do your homework before jumping in. Understanding the market and its demands is essential in starting a business.
Is the industry expected to grow for the next 10-20 years? Who are the key players in this space and how can you differentiate from them? What is the cost of entry into this business and will my budget support that? Once you’ve studied the industry, competitors, and understand your budget, it’s easier to select the best franchise to own.
3. Franchiser Reputation
There are hundreds of franchise brands registered in the United States alone. Some of them have been in the business for many years. Others are still in the process of creating processes and expansion strategies.
Neither of these is necessarily good or bad; it’s just another piece of information to consider when you investigate a franchisor with whom you’re about to sign a contract.
The franchisor’s reputation can significantly change the course of your business. Some factors to consider while studying a franchisor’s reputation are:
- Tenure: Understanding how long the franchise has been in business is crucial. If it’s been a business for longer than 5 years, it’s a good sign.
- Reviews: You can check the online reviews of the franchisor from different websites and forums. You can also ask the franchisor for connections to existing franchisees to get their perspective.
- Litigation History: Is there a history of the franchisor being sued by a franchisee or a vendor? What happened, when did it end, and so forth.
- Financial Performance: Most states require franchisors to file an FDD, and many will offer one at some point throughout the sales process.
- Media Coverage: You can also check what sort of media coverage the franchisor is getting. Good media coverage can often result in a great brand image making it one of the best franchises to own.
4. Know The Cost
One item that many new business owners fail to fully investigate is their start-up costs. Some of these fees are set and fully documented when acquiring a franchise. Others are more difficult to quantify and are not included in the original franchise payments.
It’s essential to clearly understand the exact cost you’ll incur to determine the best franchises to own.
Read all the documents carefully and have a precise number in mind. When in question, ask the franchisor and get any required details.
5. Read the Disclosure Agreement Carefully
When you reach this phase in the procurement process, you should spend some time looking over the FDD. The FDD lays out all necessary details concerning the franchise in great detail.
It contains some of the most in-depth, unbiased information on the franchisor that you can find.
As part of their sales process, most franchisors will have an FDD review call with you. This might be with your sales representative, the franchisor’s general counsel, or (more than likely) both.
Get a High-Return Franchise in Your Budget
If you’re looking for the best franchises to own, iCode School may be the right choice for you.
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