How to Narrow Down Your Options and Choose the Right Franchise Brand for You

Buying a franchise is one of the most important investments you can make. And with so many different concepts and categories out there, it can take time to narrow down your options. 

The right research and preparation can make the choice seem much easier. By gaining a better understanding of the process, prospective business owners can better narrow down their choices and eventually find the perfect fit. 

With that said, here are several places to start your journey into franchising.

Decide How Much You Want to Invest and What You Want to Earn

According to Dan Rowe, CEO of Fransmart, one of the first questions you need to ask is how much capital you are willing to lose. 

“It's really important for someone to understand what their risk is because, if they’ve been fortunate enough to save up that much money in the first place, they have to protect it,” he said.  

Franchising costs vary greatly depending on the industry. Although a buyer’s dream may be to open their own restaurant or retail store, their financial situation may not be best suited for that category. While some initial investment fees are less than $10,000, others can be upward of $1 million, depending on the costs necessary to start the business. 

The second part of the equation is how much you want to make from buying a franchise. Your initial thought may simply be “as much as I possibly can,” but Rowe noted that this is not the best way to think about it.

Potential franchisees should consider what they want out of the experience. Are you trying to replace your income? Build a family legacy? Make a certain amount every year? Different franchises can be the solution to each of these questions, so choose wisely. 

Think About What You’re Trying to Build – and Why

Rowe emphasized that “why?” is a crucial question that many franchisees make the mistake of not answering before they buy. 

“People wind up buying a 10 or 20-store territory when they really only need the net effect of three or four units,” he said. “If you zap all your money, you could wind up getting into fault with the franchisor because you're not building out all those other units, which creates legal problems or tension.”

He advises franchisees to start small on something that is appropriate for them and what they are trying to build. 

Choose Something You’re Passionate About 

Investing in a franchise that you’re passionate about or even have some experience in can make all the difference. Starting a business is hard work, so an opportunity that is more hands-on and in line with your interests may be best for first-time franchisees. 

“You should be excited every day to bring your brand to customers,” said Rowe. 

Consider a Product’s Demand

Something else to think about is whether what a brand is selling is in demand — and going to stay in demand. Consider going into a business that has withstood the test of time and is less of a passing fad. 

“If you buy into a concept that’s already a dying breed, you're never going to get that return on investment,” said Rowe. “Your segment has to have a long runway, and your brand itself has to be at the front end of its cycle so that you can still build your locations and sell.” 

Talk to the Right People

One of the best ways to find out if a franchise brand is right for you is by talking to existing franchisees. Rowe advises not only speaking to the ones that are doing well but also to the ones that are struggling. Though it is important to talk to the corporate team, they can’t always give you the same information as franchisees due to disclosure laws. 

When talking to a successful franchisee, you want to ask questions to make sure that you can replicate what they are doing to have that kind of success. Talking to the people that have been unsuccessful can allow you to find out what happened and if it was an issue with them or with the concept. 

Two questions Rowe says prospects should always are are: 

• Knowing what you know now, would you do it again?
• Are you building more stores?

“Those two are probably the best to ask because you can have a franchisee who's down on their franchisor for a number of reasons, but if they come back and say they would do it again, then at least you know that whatever they are struggling with has been worth it,” he said.