Making a List, Checking It Twice
Your franchise plan should include a well-rounded checklist
Joining the world of franchising can be an exhilarating - and often frightening - process. It requires a tremendous amount of research mixed with a bit of intuition and gut feel. To do it properly requires the careful development of a plan of action. One of the best ways to plan for something significant is to create a checklist and make sure that you cover and review each step.
It's best to look inward as you create a checklist that will help you evaluate your potential future in franchising. Take a cold, hard look at what you bring to the table. That's what the franchisor is doing. Consider the following major areas as you look in the mirror:
- How are you with risk? Can you handle it? It's a part of any business startup.
- Do your skills, knowledge, and experience blend with this franchise concept? If not, are you willing and able to learn quickly?
- Will your personal and professional life allow you to work long hours during the startup phase?
- Are you well capitalized? Enough to enter the franchise business and sustain your personal and family life until the business becomes profitable?
- Do you have the necessary skills to hire, fire, and work daily with employees? This is a crucial part of any new business operation.
- Can you deal with a variety of customers and vendors? You'll see the gamut and you'll need to deal with all kinds of personalities.
- Do you have clearly defined goals and objectives for what you want your franchise to achieve? This could be performance, growth, bottom line, or something else.
- Can you follow the franchise system and operating rules? Sticking to the system is one of the keys to success.
Next, turn the spotlight of evaluation to the franchisor. This is going to be your new partner - most likely for many years to come. You want to make sure you do your homework here as well. Don't be afraid to ask questions and be thorough. Consider this checklist as you rate the franchisor:
- Have you verified the financial background of the franchisor? You need a business partner with deep enough pockets that will be able to offer the kind of support you will need.
- What's the track record of the franchisor? How long in business? Growth curve? Business lifecycle?
- What are the franchisor's officers and key department heads like? What kind of qualifications and experience do they have?
- Does the franchisor have company-operated and franchise units? You'll want to know the franchisor's philosophies for dealing with both operations.
- What have other franchisee's told you about the franchisor? You certainly want to talk to a few of these folks.
- Does the franchisor have a good record of providing support, training, and marketing?
- Is there any history of litigation?
- What is it going to cost you to enter into business with this franchisor? Tabulate everything from equipment and inventory to payroll and other overhead expenses.
- Do you understand the franchise fee/royalty structure of the franchisor? You'll be making regular payments so be clear on what's required.
- What location(s) and territory will you be responsible for?
These are the kinds of checklists that you will want to run through as you evaluate yourself and the franchise opportunity. Make sure that you have the answers you need - and that you fully understand them - and you'll be better prepared to enter the world of franchising and likely be more successful as an operator.