I just got through reading a ditty from a self-proclaimed franchise expert on the non-official rules and regs you should use to determine what is the right franchise business for you. Here is the article in its entirety. I did add a few comments in BOLD in the Do NOT section:
Buying a franchise is not a simple process; but, it can be made easier if you follow some basic rules. Here are some things to keep in mind when investigating a franchise opportunity:
DO:
1. Take your time and educate yourself; it can take several months to find the right business. Commit to the process.
2. Know your financial situation (Assets, Liabilities, Net Worth)
3. Consult with a lawyer, accountant and/or franchise consultant
4. Carefully read and understand the FDD and Franchise Agreement
5. Create a Cash Flow statement and a business plan
6. Talk to existing franchisees
7. Compare franchises within the same industry segment
8. Take time to understand all the franchise financing options
9. Negotiate with the franchisor (fees, territory, marketing support, etc.)
10. Go to the Discovery Day
11. Be prepared to make a decision and take charge of you future
Do NOT:
1. Feel like you have to make a rush decision - Yes, you should feel urgency! Read below to know why
2. Load up on loans/debt to buy a business - Duh
3. Ignore the advice of professional advisors - This statement is so general as to be dangerous. Experts one and all, including Uncle Clem, all have an opinion. Have one good expert and an excellent small biz account (see below)
4. Trust everything the franchise sales person tells you - The depths of these statements boggle the mind. Look, if you can't trust the franchise development person then do NOT become a franchisee in the system - PERIOD!
5. Base your decision on the earnings of best performing franchisees Well gee Cosmo...of course you do not base your decision on one component of an entire process. But, let me ask you, isn't it nice to know what the best case scenario is? I mean, you already know intuitively the worst; you could fail and lose your investment (Get drunk, wreck the Maserati, get home and the dog had died and your wife has left you and the kids think you stink).
6. Bypass financial questions during investigation processThis is the best of reasons for a franchise consultant so you know how to craft these questions in order to get answers in an area that the Federal Trade Commission crucifies franchises for saying too much.
7. Cut the due diligence process short
8. Assume that the system will run itself, or that you won't have to be an entrepreneur I think you need to be entrepreneurial (or a FRANtrepreneur) but NOT an entrepreneur. You are not alone out there - besides the franchise company there are other franchisees you will get to know who are right there with you. The amount of time and effort should be understood from discussions with franchisees and a thorough study of their business model.
9. Underestimate the value of a franchise network, support and training The first truly insightful point made - franchises are a family all with the same challenges are opportunity. Don't be lame and sit on the sidelines and pretend you are different. Get in, get involved - get to know your fraternity.
10. Fall into Paralysis by Analysis mode
11. Be disappointed if, in the end, you discover that franchising is not for you.
You will quickly realize that buying a franchise is a deliberate process. If you want to become a business owner, franchising will definitely put some options on your table.
However, stick to the process, gather the information and be prepared to make a decision. In fact, be prepared for anything that can prevent you from making a decision.
Andre Chernih is a franchise expert, editor and manager of the web site http://Franchise-Opportunities-Search.com a collaborative compilation of info, articles, opinions and recommendations created to help aspiring business owners learn about franchising and find the right franchise opportunity.
The article has a certain amount of earthy acuity. Much of it is replicated in 100 books on small business ownership and virtually every word can be discovered in articles about franchising on Entrepreneur Magazine archives over the last three years.
I have my own list. I have limited it to what you should do. Doing less than this and you risk ending up never owning a business (because you never feel comfortable enough to be decisive enough to make the decision) or you end up where you should never have been in the first place, misfit in a poor choice (and most likely not manning up to the fact you are a big 'ol giant screw up for having chosen to sign up!) Here is the Wilson list.
1. Take a professional personal assessment evaluations to determine if you are made of the stuff that successful small business owners possess. The DISC, McQuaig Assessment or Meyers-Briggs Personality Tool...any and all of them will do the trick provided you have someone capable helping you understand them. I can tell you that those with strong leadership skills and high levels of sociability are the best material. Those who have learned they have weaknesses in one of those areas can work to and achieve the needed skills. You can't expect success without one or the other.
2. Having discovered you are a candidate to be a business owner generally, look in the mirror, go through all the iterations as to why this is a good or bad idea and decide you are moving forward; a job is not an option this is your decision.
3. Get every person who, in your moments of greatest clarity and honesty you know, beyond a doubt influences you to recognize you have made this decision.
4. Those that are significant others should be a part of the decision-making process to buy into your decision on the front end. They should do everything you do to prepare for this adventure.
5. Armed with an understanding of your personal make-up, evaluate you and all other stakeholder preferences to determine your personal drivers, those that are primary and those that are secondary in this decision. And no, these success drivers are not the same for everyone. Some people are driven by their passions. Some find security (and even enjoyment) working from their competencies and still others need constant change. Some people are energized by human contact and still others are drained in an environment where they have constant human contact. Will it be the industry that entices you or the earnings potential? Will you be motivated by a new concept that provides huge growth potential or the safety of a tried and true brand? Are you a security freak or an adventurer and what about your partner or wife?
6. Armed with determination, personal knowledge and a set of criteria your right fit business must meet, you must next assess your financial situation. You may be perfect for a whole range of opportunities from a psycho-socio perspective but which ones fit both A) Your Wallet and B) Your level of financial risk?
7. Now find a competent personal franchise consultant. If you do not know one call me, I know the right ones.
8. Once the franchise options are in front of you, it will take you 3-6 weeks to make a decision. If it takes you longer you are not, at present, franchisee material. Period! It may not be your fault but you weren't serious. You are not prepared. I say this because within 3-4 weeks (and sometimes life gets in the way and extends it beyond a week or two) you will know 85% of the decision-making information you should be using in order to make an pseudo-objective (I mean you have to want to do it and that is subjective) decision. The other 15% is fluid information. Hey! Remember, this isn't death and taxes. Risks do exist.
9. At week 2 you will know "the one." Get with an accountant, build a cash flow chart.
10. Consult with 4 or 5 successful franchisees and 2 or 3 failures or those who are struggling. Again, your consultant as well as the first franchisee you talk to, will be able to direct you. Ask them all the same series of questions. Have your consultant help you craft this list. Go back and ask the successful franchisee's their take on those that are challenged. Then look in the mirror again and ask yourself. Can I overcome the challenges of this business? Am I more like the successes or the failures - be honest for crying out loud - this is a big decision.
11. Don't expect to be able to negotiate changes to the franchise agreement. Most stand-up franchises will take a "here I stand" even-handed approach to the business. Territory and perhaps marketing support are two areas where they may be special assistance. This is an area a good consultant can provide you with guidance. Just remember, if you are dealing with the top 1000 franchises in the USA they have too much at stake to have new members of the choir singing off key. Their job was to create the circumstances for your success; these include the terms of your franchise agreement.
12. Go Through the End Process with the final franchise choice (make sure they are as excited about you as you are nervous yet excited about your decision).
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