If you want to be rich, one way to get there is by owning a franchise business…several franchise businesses, actually.
There are a lot of very successful (rich) franchise owners around. Most of them are multi-unit franchise owners, owning 10, 20, 50 or more franchise units. And, today, a lot of them own multiple brands-like the franchisees featured in this QSR Magazine article.
In Part 2 of this series of articles, I discussed multi-unit franchise ownership as well as other well-known franchise models. Did you read Part 2?
Part 1 of “Can Choosing The Right Franchise Make You Rich?” included an introduction to “the millionaire next door“…the person living right in your own neighborhood (a millionaire) who owns a pretty substantial franchise business.
And, there were other topics introduced. Like:
- Franchise industry statistics
- Visualizing your ideal franchise business
- Aligning a franchise business with the things you’re good at
- The franchise affordability factor
Did you have a chance to read Part 1? I hope so. Lots of goodies in that article.
So, can choosing the right franchise make you rich? Let’s find out.
Will It Work?
The franchise business opportunity you choose will have to be validated. That’s what Part 3 of this article series is about. You’ll have to find out as much as you can about the actual concept, the company, the products/services that are offered, and more. In other words, you’re going to have work to do. You can’t assume anything. Let’s go through the validation steps.
The Franchise Concept
You need to determine the thing (or things) that make the franchise concept you’re interested in special. And if it’s money your after, you’re going to want to find out if you can become rich if you become the owner.
In our busy, busy world-a world where marketing messages are being thrown at us in massive quantities day and night, it’s crucial for today’s brands to stand out. What makes the franchise you’re interested in possibly purchasing shine?
There are a few ways to find out what makes a franchise concept shine. You can:
- Ask the franchise development representative
- Ask the franchisees
- Hit a few review sites, like Yelp or one of these to see what’s being said about the company’s products and/or services
Finally, ask yourself what you feel makes the concept special. What’s doing it for you?
You need to make sure the franchisor is a high-quality one. This part of the process is crucial. If you end up buying the franchise you’re interested in, you’re going to be involved with the company for a long time. Signing on the dotted line means you’ll be legally obligated as a franchisee for 5-10 years. (Most franchise contracts are actually 10 years in length) You don’t want to enter into a long-term agreement with a company you “kind of” like. You really need to make sure you’re making a good choice in a franchise.
I just came up with a new idea for researching franchisors: Visit Glassdoor.com.
From the site:
Glassdoor holds a growing database of more than 8 million company reviews, CEO approval ratings, salary reports, interview reviews and questions, benefits reviews, office photos and more. Unlike other jobs sites, all of this information is entirely shared by those who know a company best — the employees.
Fact: Most of the people who visit the Glass Door website are job-seekers trying to get a feel for the company culture. As far as I’m concerned, franchise-seekers should be spending time on the site, too. The internal culture of a company says a lot about the leadership team-the executive team. Don’t you want to know how the employees feel about the company?
Another thing you can do is ask the franchisees about the franchisor. Ask them the following questions:
- Is the franchisor responsive to issues that may arise?
- Does the franchisor send a field rep out for in-person visits and support?
- Does the franchisor hold an annual convention?
- Does the franchisor want you to make good money as a franchisee?
- Do you feel that the franchisor considers you a valuable partner in the business?
I wrote an article for Small Business Trends a while back that includes 5 more great questions to ask franchisors. Read it here.
Are The Products/Services Up To Snuff?
A small number of today’s franchise owners discovered the franchise business they currently own through personal experience with the brand. Maybe they chowed down a fresh pizza from one of these franchise brands. Maybe they built a house in a flood-prone area and had to hire their local Servepro franchisee to do a bit of storm damage cleanup. Maybe their children took swimming lessons at a Goldfish Swim School. Doing business personally with a franchise brand can sometimes lead to ownership. Have you ever visited a franchise business and liked the product/service so much that it made you think to yourself “It would be great to own one of these?”
Now, if you haven’t sampled the products and/or services that the franchise business you’re interested in sells, you obviously need to do it. And once you do, you better love them. If you feel their offerings are average-or “pretty good,” run! It’s challenging enough to launch a new business in today’s noisy world. You don’t need to add another hurdle. (The hurdle being you aren’t enthusiastic about the products and/or services.)
Tip: Don’t be tempted to buy a franchise that’s hot hot hot–an opportunity you feel will be a huge money-maker in your city, that offers products and/or services that you don’t love. You’ll only be able to fake your enthusiasm for so long.
Tip #2: Have people you know in other cities around the country (where the franchise you’re interested in is located) spend some money with the franchise business. Ask them to do an informal “review” of the business for you. Then have them send you the receipt, so you can pay them back. (Most of them will refuse to send you their receipts) If that’s the case, get creative and find something you can do to thank them for taking their time and their money to help you out. Like this:
Now Dig In
Once you’ve validated that the franchise opportunity you’re interest in has:
- A strong concept
- A positive, professional company culture
- Products/services you love
It will be time to really dig in and do the most important part of the entire franchise-buying process. I’m going to ask you to do something I promise will be rather uncomfortable at first, but will get easier as you go. I want you to…
Call And Visit Franchisees
Real validation comes from asking great questions of the people who have taken out a small business loan, signed a franchise agreement, and are in the franchise business you want to be in. The people I’m referring to are the franchisees. They’re already (hopefully) living their dreams. They are Owners.
Of the 2,000+ articles I’ve written on franchising, I would say that 15% – 20% of them have something to do with franchise research…franchise due diligence.
I highly recommend reading and bookmarking “Reloaded: My Top Franchise Research Articles And Tips,” which includes my most popular (and most useful) articles on franchise research-on exactly how to do it right. Go here to read it now.
And, even more specific franchise research tips and techniques are included in The Ultimate Franchise Course, an easy to follow, detailed “how-to” that I created. It’s focused on teaching you how to find, choose, research, and ultimately buy a profitable franchise.
Validating a franchise concept is the way-the only way, actually, to determine if the franchise business opportunity you’re thinking of buying is for real-in this case, if you can become rich as the owner of one of them in your hometown. But, you have to know the right questions to ask. Once you know what those questions are, you ask them and go over the answers you receive, it will be decision time.
You buy the franchise and become your own boss.
You decide to not buy the franchise and keep looking for the right opportunity.
Wait…there are a few more choice you have. You can:
- Keep doing what you’re doing-keep your job etc
- Find a new job
- Come up with an idea for a business and create it
- Buy an existing business
There are lots of choices. If you feel the franchise ownership route is not the way to go now, fine.
At least you looked.
Rolls Royce image courtesy of Sven-https://www.flickr.com/photos/charlo_be/
Improve Your Franchise IQ With These Recommended Articles:
How to Use a Franchise Opportunity Website
The 10 Commandments of Franchise Research
What You Need To Know About Franchise Consultants/Brokers