Tom Norwell has been a leader in the Retail and Franchising industries for over 25 years both in Canada and Australia. Tom became a Boardroom Metrics Accomplished Executive in September of 2010.
This is Tom’s second post on franchising. His first post and advice for franshisors can be found here.
It should go without saying but I’ll say it anyways….purchasing a Franchise is a “life changing” if not a “life-style” decision. So, it’s imperative that an investor does their homework.
You’re about to take what could be the most definitive step in your professional, and even financial life. Do it wisely.
Here are three key considerations to keep in mind when looking at a franchise concept.
First, make sure the concept and brand resonates with you. Make sure that you’ll be proud to represent it.
You are going to be telling your family and friends about your new venture and most likely either asking them to be customers or promote it to their extended circle. You’re also going to be spending the better part of your waking life working on it (not to mention those sleepless hours thinking about it). You had better be passionate about it!
You may also be asking family and friends to work with you on the venture and you’ll have to enthuse them. If you’re going to be investing your life’s savings and your sweat equity make sure that it is going to be worthwhile!
Second, once you’ve found the concept that satisfies your ethical compass ask yourself, and the Franchisor for that matter, “why wouldn’t I just do it myself”? “What is unique about the concept and its brand that keeps you or a competitor from gaining market share unchallenged?”
Look at the uniqueness of the brand. Identify if the franchisor has proprietary rights to software, processes, product etc. Is the Franchisor’s distribution method (of brand and product) unique and efficient? Not only will these questions assist in satisfying your investment criteria but positive answers will also affirm that there is a foundation of sustainability within the system.
Third, answer the question “how do I get out?”!
Getting out is as important as getting in! Remember this is not a “job”. You are entering into a legally binding contractual arrangement. In most cases you just can’t close up shop and walk away if you don’t like it anymore. The transferability of the business unit to another Franchisee, back to the Franchisor, or to a family member needs to be investigated prior to taking on the endeavor.