Franchise opportunities are attractive to aspiring business owners for a number of reasons. Owning a business may be fulfilling a lifelong dream, and available franchises come in all shapes, sizes and industries. Many franchises are also attainable for those with less capital to invest.
But many factors determine whether your franchise journey will be successful. Do you want to own a business related to a particular passion or skill you possess? Are you targeting a brand name based on its reputation and successful business model? Here are a few things to think about.
Key considerations for first-time franchisees
Statistics show more than 750,000 franchises exist in the United States. The choices can be overwhelming. If you are unsure of a service or product to pursue, here are several elements to help you narrow the field:
What motivates you?
Being a first-time business owner is a lot of work, even if you have a proven brand. Expect to work long hours and be hands-on for some time. Choosing a type of business you are passionate about can be crucial for weathering the ups and downs that will likely occur.
How much can you invest?
Low-cost franchise opportunities are available – some for a few thousand dollars – and some can be operated from home. Established brands will require more significant investments. You might want to consider a new or emerging franchise that offers lower fees. You can view Entrepreneur.com’s 2022 list of the top 150 new franchises to get an idea of the diverse range of opportunities.
How much support will you have from the franchisor?
Most successful franchises provide initial and ongoing training and support. That’s a big part of why they are successful. To gauge their involvement, contact franchisees from the exhibit in the Franchise Disclosure Document (FDD), which contains contact information of previous and existing franchisees who can talk about their experiences with the franchisor.
How will your franchise be affected by the economy?
The pandemic and inflation are two concerning factors for any business owner today. Supply chain issues are also a complicating factor for many. Gauging how other franchisees have dealt with these issues can help you identify franchises less likely to be affected during economic downturns.
Due diligence includes knowledgeable legal guidance
While there are many things you can do on your own to select a franchise that best fits your situation, there is no substitute for experienced legal guidance. Franchise law is complex, encompassing many documents you should have experienced counsel review and possibly negotiate, including the FDD, the franchise agreement and any commercial leases.
Our goal is to provide a thorough review of those documents, identify potential risks and explain your obligations to the franchisor, as well as their obligations to you. With over 25 years of assisting franchisees in obtaining their dream, we understand how to protect your interests and avoid potentially costly mistakes.