First of all, think about the work environment you are interested in, and the requirements that running businesses in various industries will have. For example, do you like working late (and long) hours, hiring and managing employees, and dealing with the public? If so, you could consider the food service industry. Think long and hard about what "fits" your lifestyle. Involve your family and any friends or associates you may want to pull into the business. Write down your objectives. Sometimes, just the act of writing things down helps you more clearly identify what you really want.
Once you have identified the general category of business you want enter into, visit some of the franchising Web sites we have listed at the end of this article. On most of these sites, you can search for franchises based on investment levels, type of business, and sometimes geographic region. Some even give you estimated breakdowns of what your total investments will be, as well as the ongoing royalty and advertising payments. You can also use a franchising consultant to help narrow down your choices.
When you get a list put together, begin contacting the franchisors for additional information. One thing to keep in mind throughout this process is that while you're shopping for a franchise, those franchises are also out there shopping for franchisees. You'll be interrogated as much as you interrogate them. You both have to agree that it's a good match in order to proceed.
1.The franchisor will send you brochures and other materials, and most likely request that you complete a questionnaire. You will proceed based on the outcome of that exchange of information.
2.The next step will be your evaluation of the company's Uniform Franchise Offering Circular (UFOC). The Federal Trade Commission (FTC) requires this document be provided to disclose detailed information about the franchisor at least 10 days prior to any franchise purchase. That information includes:
- The franchisor, its predecessors and its affiliates
- Business experience/history
- Litigation
- Bankruptcy
- Initial franchise fee
- Other fees
- Initial investment
- Restrictions on sources of products and services
- Franchisee's obligations
- Financing
- Franchisor's obligations
- Territory
- Trademarks
- Patents, copyrights and proprietary information
- Obligation to participate in the actual operation of the franchise business
- Restrictions on what the franchisee may sell
- Renewal, termination, transfer and dispute resolution
- Public figures
- Earnings claims
- List of outlets
- Financial statements
- Contracts
- Receipts
Ask specifically if they would do it again knowing what they know now. These opinions are very important to your research into each franchise. Look for trends that might indicate overall dissatisfaction with the company -- and avoid those like the plague!
4.Review the franchisor's business plan, operations manuals, and market analysis. Try to meet with the franchisor in person. Make a point to meet the franchising operations personnel with whom you will be dealing. Keep these questions in mind while you are meeting with them:
- Is the information you are given clear?
- Does the training program appear to be thorough?
- Does it match what you were told by their existing franchisees?
- Does the market look strong?
- Are there too many existing franchised locations in your area? If the area is already saturated, you may need to look elsewhere (either in location or business).
- Are there no locations in your area? This may not necessarily be a good thing either. It may mean that the competition has a strong hold on that regional market and you'll have a difficult time getting a share of it.
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