Ask About Franchise Fairs
There's going to be a franchise opportunity fair in my town next month, and since I'm interested in getting into my own business, I think I'll attend. Do you have any hints on what to look for at this type of event?
You're smart to prepare in advance in order to make the best use of your time. A franchise expo gives you a chance to compare several franchise systems side-by-side, albeit on a rather superficial level. Just like shopping for anything else, it's best to first determine what your budget will tolerate, so start by figuring out your investment limitations.
Next you need to think about what experience and skills you can bring to a business. Although some off-the-wall concept may pique your interest and enthusiasm at the fair, what kind of business are you really prepared to operate successfully for the next 20 years?
It's well to remember that the folks representing each franchise concept at the fair are basically sales persons. It's their job to sell you on the merits of their particular business idea and convince you to invest your entrepreneurial grubstake with them. While it's good to keep an open mind and explore all options, don't waste your time talking to companies you can't afford or haven't the background to run just because a pushy or over-enthusiastic sales person wants to give you their whole pitch.
Select those franchises that you can afford and could successfully manage, and ask each of them the same questions in order to get a good comparison. You'll want to know, at a minimum, the following:
- How long have they been in business?
- How many outlets do they have and how many of these are "factory stores" as opposed to franchisees?
- Where are these located? Are there protected territories? (Get full details about those operating nearest to the territory in which you'd consider taking one of their franchises.)
- What's their upfront franchise fee?
- What are the usual startup costs?
- Do they require you to pay a periodic royalty? If so, how much and how often?
- Do they offer training? Technical assistance? Ad support?
- What kind of restrictions do they place on you? Site approval, design requirements, ad fees, accounting system, uniforms, centralized purchasing?
- What's the earnings potential of a franchise? (Be sure to get this in writing. You want to know what the estimates are based on.)
- Will they give you a list of current and former franchisees to interview?
- How does their offering agreement stack up? (Be sure to get copies of all the disclosure documents required by the Federal Trade Commission.)
Once you've gathered all the above-mentioned information, you'll have plenty of material for further research and analysis prior to any investment decision. And you will, of course, discuss the results of your research and comparisons with your lawyer and/or accountant before you even dream of signing any contract with a franchisor, right?