How to Buy a Franchise: Knowing What to Look for Is the First Step

Franchising can provide ambitious entrepreneurs with a profitable and fruitful business opportunity, but it can be difficult to know where to start. Investing in a franchise is no small investment and it’s not a decision that should be taken lightly.

Before you embark on this journey, there are a number of things you should keep in mind. In the most recent episode of the “How to Buy a Franchise” Masterclass, 1851 Franchise publisher Nick Powills elaborates on the critical aspects to consider when entering the world of franchising and outlines exactly what you should be looking for. 

Starting Your Search for the Right Franchise

When it comes to franchising opportunities, you are spoilt for choice. According to Vetted Biz, there are more than 753,000 franchise establishments operating in the United States today. As you begin your journey, it’s essential to start your search with a clear understanding of what resonates with you. 

“The easiest way to start figuring out what brands or categories make sense for you is to start with what you’re passionate about,” said Powills. Whether you’ve always been a fan of a specific brand for its product and fan base, or you’ve had a memorable experience at a particular establishment, your passion should be the cornerstone of your franchise exploration. 

Once you’ve identified a category that aligns with your passion, you should also research other brands within that category and compare your options. Some factors to consider when evaluating potential brands include: 

• Leadership. Look at the vision of the leadership and ensure that it remains intact. Strong leadership is crucial for the long term success of a franchise. 
   
• Point of differentiation. Identify what makes each franchise unique, whether it’s innovative products, exceptional service or a distinct market approach. 
   
• Effective marketing. Evaluate franchises with clear and compelling marketing strategies that adapt to the evolving landscape, ensuring visibility and success. 
   
• Cost of entry and potential earnings. Examine the financial aspects, including initial investment and potential returns for a balanced assessment of the franchise’s financial viability. You can find this information in a brand’s Franchise Disclosure Document (FDD). 
   
• Ability to scale. Assess growth opportunities within the franchise system, considering support systems and market dynamics that facilitate scalability. 

Another good way to gain insights into the potential success of a franchise is to evaluate the experiences of other multi-unit franchise operators. By speaking with current franchisees, you can gather firsthand information about the challenges and successes they have encountered within the franchise system. 

“If you see existing franchisees continuing to add scale or units, that means there’s some excitement behind the business,” said Powills.

Laying the Foundation

Once you’ve determined your financial capacity, found a brand you're passionate about, and explored similar businesses within the category, you will be well-positioned to move forward in the franchise selection process. And by considering the aforementioned elements, you will not only be laying the foundation for a successful franchise investment but you’ll also increase the likelihood of a fulfilling and rewarding entrepreneurial journey. 

Interested in taking the first step in your own franchising journey? Consider learning more at https://1851growthclub.com/.