At the International Franchise Professionals Group (IFPG), we’ve helped hundreds of aspiring business owners identify and invest in their ideal franchise businesses. We know that the process of selecting a franchise can be daunting, and we’re here to help. This article serves as a comprehensive guide to answer your most frequently asked questions on the best franchises to open and on franchise investing generally.
Starting a franchise business requires considerable amounts of both financial and human capital. Given these investments, it’s important to carefully select the right franchise. After all, this decision will determine the potential success of your business. This guide will provide a thorough understanding of the steps involved in finding the best franchise for you. We will cover topics such as researching and assessing franchises, financial considerations, and advice for entrepreneurs.
We’ll outline common questions around selecting the right franchise, such as:
What kinds of franchises should I consider?
How should I conduct my research?
What financial considerations should I make?
What if I already have a business, can I still join a franchise?
The information in this article can be used as a standalone guide to answer your franchise questions or as a companion to our free franchise assessor tool. With our guidance and comprehensive resources, you’ll have all the information you need to make the right franchise decision and become a successful franchisee.
What Kinds of Franchises Should I Consider?
As you consider different franchises to invest in, it’s important to keep your interests and skills in mind. During your research, ask yourself what businesses you’re truly passionate about; you’ll be more likely to succeed if you have a personal connection to the business.
You should also consider the potential labor and capital investments of your business. Different franchises have different setup costs and associated fees. Does the business require a significant financial investment? What kind of after-setup costs should you expect?
In addition to considering the financial aspect, entrepreneurs should evaluate whether the Franchise Disclosure Document (FDD) of a particular franchise has any red flags. The FDD contains the details of your particular franchise offering, including startup costs, franchise fees, estimated revenue, and more. Make sure to review it thoroughly and look for financing details and financial performance representations, or FPRs.
How Should I Conduct My Research?
We recommend gathering data-driven information on potential franchises. Read reviews online, research competitor businesses, and assess the financial stability of the business. You should also reach out to the franchisor’s existing franchisees. These conversations will give you a better understanding of the franchise and can help answer any lingering questions about the day-to-day operations of the franchise.
We also recommend reading up on the franchisor. Consider their track record, the industries in which the franchisor typically operates, and the types of businesses they own. Evaluating this information can help you decide whether this is the right business and franchisor for you.
What Financial Considerations Should I Make?
Much of the financial information about franchise opportunities can be found in the FDD. Here, you can glean information about estimated net incomes, royalties, startup costs, and more. You will need to work with a financial advisor to ensure that your investment is compatible with your immediate and long-term goals.
In addition to assessing the financial stability of the business, you should also consider potential financing opportunities that are available. Reach out to local lenders to understand financing options, such as Small Business Administration (SBA) loans.
What if I Already Have a Business, Can I Still Join a Franchise?
Yes. Many entrepreneurs choose to open franchises in addition to, or as part of, their existing businesses. Before doing so, make sure you understand the laws governing franchises in the region in which you live, as they vary by state and country. Additionally, consider the start-up costs and potential returns of the franchise. You’ll also want to talk to a qualified attorney to review any applicable contracts or agreements.
Ultimately, the best franchise for you depends on various factors, such as your interests, skills, finances, and goals. It pays to do your homework and go through the decision-making process slowly and completely. With the resources available through IFPG and our franchise broker group members, you’ll be able to find and invest in the best franchise for you.