What Franchisee Prospects Should Look for in a Brand

Deciding which concept to franchise with is a big decision. It’s a sizable investment of both time and money, and finding the right franchise brand for your lifestyle might seem overwhelming. 

To help find the industry and business model that perfectly fit you, 1851 Franchise has compiled the factors that should be taken into consideration when choosing a franchise.

Passion

Above all else, it’s important to follow a career path you’re passionate about. Theresa Huszka, CFE and senior consultant at MSA Worldwide told 1851 Franchise, “The biggest thing a franchise candidate really needs to focus on is what gets them excited. What is it that they can become passionate about? I don’t care how profitable a business is, if you’re not passionate, it’s not going to be a good fit.”

When deciding whether to invest in a particular franchise brand, it is imperative to believe in the company’s overall vision. Investing in a franchise means investing in an already-established and successful system, so it’s extremely important to embrace it — and that includes everything from the vision to the mission, people, culture and product. 

Huszka continued, “You should really do some soul-searching and find out who you are as a person.” 

Do you prefer to be hands-on or do you like managing people? How much money do you expect to make? What kind of lifestyle benefits do you want to have? These questions can help you narrow down the type of franchises you would like to focus on so you make a more thoughtful decision.

Investment 

While franchising is an emotional decision, it also needs to be a practical one. One of the most important factors is the level of investment necessary for a particular brand. If prospective franchisees don’t have the specified amount of liquid capital outlined in Item 19 of the brand’s FDD (Franchise Disclosure Document), they must ask themselves how much they are willing to borrow and research the timeline on the return-on-investment for that specific brand. 

Luckily, there are a few different loan options available to franchisees. However, it’s critical to figure out which loan options best fit with the lifestyle and the business of the prospect. Prospective franchisees need to understand all of the numbers associated with each of the franchises they’re looking at. For example, a lower start-up cost can be beneficial, as that could mean a faster ROI.

It’s important not to jump on a fad or into an established brand before doing your homework. You can first visit websites like the International Franchise Association or Franchise Gator to see what franchises are in your area and review pricing. You can also attend the International Franchise Expo to learn basic information about the different franchises available. Once you have an idea of what you think you want, it would be helpful to speak to a franchise broker or franchise consultant. They have the contacts and knowledge to help you find the perfect franchise to fit your financial needs and goals.

Availability

One of the most important things to consider when investing in a franchise is whether the concept fits the desired market. Franchisees should strive to be in a market they are familiar with, but the market also must fit the brand. It is essential to ensure the concept is located somewhere that aligns with your target demographics. If prospects — with the help of their potential franchisor — determine their product is going to be well-received, then they can discuss how many locations can realistically fit in the territory. If the brand is more established in the area, that level of brand recognition may also be a major selling point. 

In regards to room for growth, Peter DiPasqua, CEO of DiPasqua Enterprises, a multi-brand operator who is bringing the emerging fresh-pressed juice franchise Pure Green to Tampa, Florida, notes that getting involved with a business at an early stage “allows for more opportunity to acquire large territories and the ability to build them out strategically in the future.” 

Validation

Most franchisees will tell you how crucial validation is when deciding whether to invest in a brand. Prospective franchisees are encouraged to take advantage of the resources given to them in the FDD, specifically the Item 20, which outlines such information as a list of the brand’s current franchisees and their contact information. This is extremely valuable to prospects, as they can reach out to the current franchisees and hear their input on what it's like to work with the brand. 

This is a chance to ask important questions such as: Did their investment fall within the range that is listed in the disclosure document? Are they happy with their current returns? Do they feel good about the decision that they made? How did the brand support franchisees amid COVID-19? These conversations can provide new insight into how the company functions and if it is delivering on its promises.

In fact, Dipasqua’s most important piece of advice for those looking at investing in a franchise is to speak with and meet with everyone they can before deciding. “Before making a final decision, prospects need to speak with current franchisees, meet with people from corporate and visit several of the brand’s locations if they really want to get a feel for the brand and understand what it’s about,” he said.

Competition

Once a prospect has narrowed in on a concept, there’s one more factor that can solidify a decision: competition. It is likely your ideal franchise has a couple of close competitors in the industry. Take a look at their business models to determine what makes the brand you’ve chosen unique in the industry. It’s important to truly understand your competition so you can make an educated decision and come out stronger right from the start.

Analyzing these factors and doing due diligence on each individual concept will ensure that franchise candidates have the information they need to move forward with the big decision of choosing a brand.