You wish to buy a franchise, so what’s next? Investing time to research and to understand your business concept and financing options are critical first steps for any budding franchisee. Franchising is a partnership between you and your franchisor, and it is important your revenue expectations, value system, and professional passions align well with the brand with whom you ultimately choose to partner.
What is right for YOU?
No time to data dive? Re-prioritizing your time to evaluate what you want and where you want to go is critical. Early research to discover myriad options available to you is a necessary step which will lead you toward the concept which fits best with your goals. Understanding the size of the average location in revenue and capital investment is important as you take stock of your goals. Franchising is ideal for those looking to plug into and adhere to a proven system. Taking the time to evaluate your situation, your strengths and weaknesses – not only financially but personally – prior to making the decision to franchise is crucial for your long-term success and overall satisfaction.
In addition, consider your future goals in as much detail as you can. For example, ask yourself if you want to own a single franchise, or do your aspirations align more with a multi-unit structure? Do you already own another business? If so, do you have the time and energy to focus on a new endeavor? Be sure to assess any possible risks for the steps you plan to take. Operating and owning a franchise can require extensive time, commitment, and money. On the other hand, franchise concepts have track records which are transparent and which allow you to achieve your goals without developing, executing, and refining untested practices.
Next, research the company or companies you are considering, being thoughtful about the core business concept and the brand’s culture, as well as how you see your own set of values and ambitions aligning. Visit a franchise you may be considering to obtain a deeper understanding of the business. Let’s look further into these two important aspects:
Business. The company you ultimately choose should offer synergies with where you’ve been up to this point in your career. You should be able to identify your prospective individual job duties and larger staffing plans with your past experience, growth goals, service offerings, and so much more; therefore, analyze all the qualities important to you and determine if they are a match. For instance, what are the company’s goals in the next five to 10 years? Are they planning future expansion? Is the franchisor investing in the brand? Are their current performance metrics healthy and trending positively? Have recent start-ups performed well? Is the industry for the concept positioned for long term value?
Also, be sure to factor in the market area’s need for the franchise’s product or service. You may have the experience and passion to deliver top-notch service, but if there’s already another established and successful company offering the same product to fulfill the target audience’s needs, the opportunity in that space simply may not be viable. Understanding the market potential to a successful franchise is important. Relative to the brand you choose, ensure you have exclusive territory, and take the time to understand its geographic boundaries and core demographics. You do not want another location opening up near you, hindering your ability to maintain a healthy revenue stream. Understand the franchisor’s support model and its operating system and how it positions you for success.
Culture. What set of values do the brands you’re considering hold stock in, and do they match yours? Do they have a clear vision and stated mission and purpose? Try and reach out to current franchisees and hear what they have to say about the company, their level of franchise support beyond initial training, and their overall processes as it relates to living out their stated core values. This may be you in a few months, so it’s worth the time and effort to ascertain if potential synergies exist. It is an ideal opportunity to acquire a first-hand understanding of what a day in the life of a particular franchise looks like.
Talk to the bank.
Most franchises require their franchisees to meet certain financial requirements before they seriously consider any prospect for approval. Expect this to be an objective exercise based upon financial information which is required, background data, past business experience, and any professional goals which can be articulated. Once approved you may be required to develop a business plan and attend an onsite “discovery day,” an industry standard. Through the approval process you will have the opportunity to review the franchise agreement and ask any relevant questions. Pay particular attention to the Item 19 section and to data about the franchise’s financial results.
It’s imperative to thoroughly analyze the deal you’re considering. It is required by law to receive the disclosure document at least 14 days in advance of signing, so take this exciting but significant, possibly life-changing period to carefully dissect the contract and to seek answers to questions which may arise.
When working with banks and the franchisor, it is important you have a business plan, a budget, and a forecast. Many franchisors help with this process. It is also important, when working with a bank, to understand if your franchisor has on file a Bank Credit Report. This is a confidential document prepared just for banks to understand the success of the franchise concept versus other concepts, it details information about the company’s past performance. A successful brand should have a positive report to help you obtain financing with the bank.
Above all else, follow your passion. A franchise may have all the right attributes on paper, but if you’re not passionate about the brand and what it offers, lasting professional success and personal satisfaction will be difficult to maintain. And if you do choose to invest in the brand you’ve identified as “the one,” commit wholeheartedly to the process before and after your doors open to the public. A franchise has spent decades, in many cases, perfecting their processes, so it is in your best interest (and your money’s) to listen to and learn from the experts to make your business grow beyond your wildest dreams. It happens every day to people just like you!
TWO MEN AND A TRUCK® is the largest franchised moving company both in the United States and internationally. Currently there are more than 260 national locations and 1,600 trucks operating in the U.S.; in total, the company operates 280 locations and 1,800 trucks. TWO MEN AND A TRUCK® has performed more than 4.7 million moves since its inception in 1985. The company has seen consistent monthly growth dating back to December 2009 and more than 28 months of double-digit growth. Each location is independently owned and operated.