Evaluating newer franchise opportunities can be quite challenging. However, there are ways to gather the information you need to make an informed decision about whether to move forward with the franchise you’re considering. Here’s how you can do it.
**Steps to Evaluate Newer Franchises**
First and foremost, thorough research is crucial when evaluating franchise opportunities. But researching a franchise that’s just started can be tricky. Here are some steps to help you.
1. **Have a Detailed Conversation with the Founder**
Set up a comprehensive call with the person who funded the franchise concept you’re interested in. During the call, ask about the origin of the idea. Inquire how the founder tested the concept, the duration of this testing phase, and when it was converted into a franchise business. This will help you understand how well-thought-out and tested the idea is.
Additionally, ask how the founder went about franchising the business. There are a couple of methods to do this:
– Hiring a franchise attorney to prepare the necessary legal documents to transform an independent business into a franchise.
– Engaging a franchise development firm that can assist in writing the operating manual, creating marketing systems, setting up new franchise sales programs, and establishing proper franchisee training programs. Many development firms also have access to competent franchise attorneys to handle the legal aspects.
A key insight my Dad shared when I entered the franchising world: “Some franchisors might opt for the cheapest route, especially at the beginning. If you encounter a franchisor who has only invested enough to make the franchise legally compliant, they may only sell a few franchises. Legal compliance is just a part of launching and growing a successful franchise.”
In simple terms, if the franchisor has only invested in the legal framework but hasn’t put effort into developing comprehensive operational systems and support, you might want to consider other options.
2. **Visit the Franchise Headquarters**
While phone conversations with the founder are helpful, nothing beats a face-to-face meeting. Arrange for a 2-3 day visit to the franchise headquarters. This allows you to have significant one-on-one time with the founder and other staff members. You’ll get the chance to see them in action and evaluate the team dynamics firsthand. An in-depth visit filled with well-prepared questions can be incredibly valuable in making an informed decision.
Usually, talking to and visiting franchisees is considered the best research method. However, with newer franchise opportunities, there might not be many (or any) franchisees to interview. The few that exist may not have enough experience to provide the information you need.
Therefore, when evaluating newer franchise prospects, most of your time should be spent with the franchisor. Ultimately, your decision on whether to buy the franchise will come down to trust and intuition. Do you trust the founder and the headquarters team? And does the franchise opportunity feel right for you?
