The Franchise Research Checklist: Ensuring Thorough Evaluation

Aspiring entrepreneurs contemplating franchise ownership face a complex decision process that demands careful research. From character alignment and industry evaluation to market trend considerations, here is a comprehensive checklist for prospective franchisees to think about. 

Key Factors for Consideration in Franchising

According to Todd Pfister, managing partner at FranNet MidAmerica, there are four C’s that every prospective franchisee should consider before ownership. These include: 

• Character: Do you want to align yourself/reputation with these people?
• Competency: Does this brand know what they’re doing? Do they provide quality support?
• Culture: Do you fit the culture of the company?
• Chemistry: Do you enjoy working with these folks?

There are also important characteristics to consider about yourself and the business you are considering, including what Pfister calls the “four legs of the business ownership stool”: 

• Aptitude: Day-to-day skill sets such as sales, marketing, operations and hiring/firing
• Systems: Business preferences such as employees, the industry and brand maturity
• Investment: How much are you willing to invest up-front? What about the potential for a return on investment/equity?
• Timing: If you find the perfect brand but the timing isn’t right for you or your family, it can be a deal-breaker. 

Addressing Fear in the Process

One of the most common challenges in the research stage of franchising is being held back by fear. It is important to consider whether your fears are valid or whether you need to take a leap of faith. 

“When fear hits, anchor back to compelling reasons that are decided upon in an objective state of mind,” said Pfister. “If a business hits compelling reasons, run to the fear. If not, re-evaluate.” 

The key is to approach the research process with a realistic mindset. Understanding that every franchise has its pros and cons enables prospective franchisees to make a more balanced assessment. Instead of seeking perfection, focus should shift toward finding an opportunity that aligns with personal and professional goals while being aware of and prepared for the challenges that may arise. By doing so, investors can set realistic expectations and develop strategies to mitigate challenges. 

Consider Market Trends

Market trends also play a role in the research process. Location, for example, is important to consider. Look for validation in similar markets. 

“If you’re operating a business in Indianapolis, validate in Lexington [Kentucky] and Cincinnati [Ohio], not Los Angeles or New York City,” said Pfister.

Additionally, look into the demographics of where you want to open your business and whether they align with the industry you’re going into. For instance, if you are going into home services, the presence of both boomers and millennials could indicate a diverse and potentially lucrative market.

Make an Informed Decision

Reflecting on the information provided above can serve as a powerful tool for prospective franchisees. By approaching franchising with eyes wide open, individuals can discern the benefits and drawbacks of each brand. Importantly, Pfister noted that there's no perfect opportunity. Instead, prospective franchisees should focus on whether the opportunity aligns with their compelling reasons for entering into business ownership.