So you have been looking at franchises for sale. Did you know that according to the U.S. Small Business Administration that 30% of all independent businesses fail in their first year? Yet less than 1% of all franchises fail in the first year. Pretty amazing, huh?
Furthermore, a new franchise opens every 8 minutes in the U.S. There are more than 8 million people employed by U.S. franchisees. And franchisees in the U.S. produce over $800 billion in annual revenue!
So now that you have made the decision to buy a franchise, what next? Which one do you choose?
Here are 10 tips for selecting a franchise.
1. Choose a proven franchise with a lengthy history of success. Enough said.
2. Make sure that the franchiser has a proven management team and is willing to give you and your team the necessary initial training for success. It's like if you buy a new car. Wouldn't you want someone to show you how to drive it?
3. Make sure that the franchiser is willing and able to be there for you in whatever capacity down the road. Service with a smile. Who is going to service your new car for you when it needs repair?
4. Research the franchiser's territorial rights thoroughly. Make sure there is no overlap between territories.
5. Research the franchiser's financial strength. Are they outgrowing their means?
6. Try to choose an industry that you are familiar with. If you have no automotive experience, then maybe that automotive repair franchise does not make the most sense.
7. Examine the initial franchise fees and future royalty payments. Does the benefit of owning a franchise outweigh the costs?
8. Talk to other franchisees. And don't talk to the ones that are recommended by the franchiser. Get a feel for their level of satisfaction, especially as it relates to ongoing support.
9. Get professional help (no, not a shrink!). I mean use your accountant and attorney. Odds are they have seen these type of opportunities before. If your attorney has not, there are many attorneys that specialize in franchise law.
10. Use your gut. Do what you think feels right. Do not necessarily believe what every franchiser tells you.