Should You Be a Franchisee?

According to the International Franchise Association (IFA), the following 10 questions are the most important potential franchisees should ask themselves before moving forward with a franchising opportunity.

We asked our team of experts for their insight into each of these questions:

1. Are you willing to take on the responsibilities of managing your own business? “It’s important to know what type of business owner you want to be.  Do you want to be an owner-operator, where you work in the business on a day to day basis?  Do you want to be an absentee owner, where you hire someone to run the business for you and you manage it from a higher level?  Most franchisors know what type of owner they need in their model to be successful.  This will be another filter to help you through all of the opportunities that are out there.” -  Scott Oaks, ten year in-house franchise developer and current external consultant

2. Will you enjoy the franchise? “Many times people pass on great franchise business or one that is ideal for them simply because they don’t seem themselves delivering the end product.  An example would be a cleaning franchise.  Many people may not be passionate about cleaning houses but a franchise owner is not the one cleaning.  They are focused on sales, advertising, managing an office team, etc. which can be very rewarding and something they could be passionate about.” - Sean Fitzgerald, former franchisor, 15-year  in-house franchise developer and current external consultant

3. Are you willing to completely follow the franchise system? “You see the same 100% commitment in the best franchisees. Specifically, though, I find that the most successful franchisees make a big investment in their management infrastructure and training. They may have a slightly higher learning and development spend in terms of dollar per store but you’ll normally find that they outperform others in their system. With that commitment to infrastructure and strong training they are able to identify issues early and minimize their effects on operations and ultimately their bottom line.” - Tommy Lee, CPA; partner at Aprio LLC with a focus on franchising

4. Do you have a history of success of interacting with people? “If you are introverted or do not feel comfortable selling or dealing with people, then you should not buy a franchise that is sales focused. In other words, don’t just buy a franchise because you love the product or the industry.  You may love donuts, but would you love running a donut shop?  You should buy a franchise based on what “a day in the life” is for successful franchisees and if that is what you want to do.  You should also match up your skills sets with the skills sets required for that franchise.” - Sean Fitzgerald

5. Can you afford the franchise?  “Buying a franchise does not guarantee success.  Because you are purchasing a proven system, training on that system, support in operating that system, and the system has a track of record of success, does not mean you just have to open your doors and the rest is easy.  As you research franchise opportunities, be sure to understand how long not only does it take to get open, but also to get up to “break-even”.  Which ultimately is defined as when revenues are now at a point to where they cover the expenses of the business including some type of income for yourself.”  Then get an understanding of the effort and amount of time it typically takes to get there.” - Scott Oaks

6. Have you carefully studied the legal documents? “We always recommend that our clients have a franchise attorney review the franchise agreement. The franchisee should hire a franchise attorney to explain it to them. It should be different than the franchisor’s lawyer.” -Steve Beagelman, former in-house franchise developer and now external consultant as CEO of SMB Franchise Advisors*

7. Does the franchise you are considering have a good track record of success? “When performing due diligence, remember that all franchisees are not created equal. Different markets, different personalities and different marketing spends puts everyone on an unequal playing field. Even though we want to believe that every brand is McDonalds with consistency, they are not. Know there is their story, the other story and the right story.” - Nick Powills, Publisher of 1851 and 13 years of experience in franchise consulting

8. Are the franchisees generally happy and successful? “What makes a good franchisee and franchisor is, first and foremost, that both are in it for the long-term and are willing to invest in each other. Locations simply will not make it if the goal is a quick profit, rather the focus must be long-term growth.  Along those lines, successful franchisees and franchisors must be focused on win-win solutions--neither can benefit at the expense of the other. In order to do this, each must be able to view problems and solutions from the other's perspective and trust in the good intentions of the other.” - David Almeida, Legal Partner at Benesch, Friedlander, Coplan & Aronoff, LLP

9. Do you like the franchisor’s staff - those with whom you will be working? “I find that the best Franchisors are 100% committed to quality of product, service and brand. They not only display it in their promotion materials but you will find that they inject that level of commitment throughout their organizations.”  - Tommy Lee, CPA

10. Do you have a support system? “Here’s a common mistake that I’ve seen during candidates’ searches for a franchise.  They don’t get their spouse/family involved in that decision-making process.  I’ve even had candidates who had an agreement in hand and ready to sigh, when they said ‘I guess I should make sure my wife is on board with this.’  That’s not the best way to handle this process.  As much as you may think this opportunity is just going to be you running it, it’s not.  It doesn’t matter whose name is on the agreement, being a small business owner is a family decision.  And everyone should be involved at some level of the decision-making process and understand the responsibilities and expectations that come with owning and operating a small business.” - Scott Oaks

Becoming a franchisee is more than just taking a job; it’s buying into a multi-year commitment risking time and money  to gain more controlled independence, the ability to choose colleagues and to have a built in support system. But it’s not for everyone and requires thoughtful reflection.

For more information from the IFA and to read the more details about “Is Franchising Right for You” on the IFA’s site, click here.