With so many franchises for sale in today’s market, many investors are left wondering how to choose the best franchise.
The first step is to clarify what you mean by the “best” franchise. For some, “best” means profitable. That’s important but if the franchise isn’t ethical, then the so called “profitabity” means nothing. So in reality, the first thing you need to be concerned about is finding a franchise that is ethical. They need to be upfront about their business model and not try to “fool” potential franchisees into signing a contract that is unsuitable for them.
So how do you know if the franchise is ethical? Here are some ways to decipher a good franchise from a bad one and find the best franchise for you.
- Look for franchises that are members of franchise trade associations.
Just like professionals such as lawyers and accountants belong to associations that lay out best practices and regulations for the industry, there are also associations for franchisors such as the International Franchise Association. Associations like these usually have membership requirements and a code of ethics that members agree to.
- Work with a no-cost franchise consultant.
One of the great advantages of working with a quality franchise consultant is they know the franchise business well and watch for unethical franchises. Some consultants also thoroughly vet the franchises they connect potential franchisees to, which provides added peace of mind. It also saves time because much of initial investigation is done.
- Talk to current franchisees.
Once you identify a specific franchise, you can investigate more. If you really want to find out what it’s like to work with a particular franchise, there is no better source than other franchisees within that franchise.
To get the opinions of other franchisees, you will likely have to contact them directly to determine whether the business you are considering is a good franchise to buy. When you talk them, be sure to ask about their relationship with the franchisor, how much support they receive, etc. Remember, they were once in the same position that you are in now, and most will be happy to provide advice.
- Watch for problems in the agreement.
If everything checks out ok after you’ve done your research and you’re ready to move forward, the next step is to make sure the franchise contract covers the bases. Because franchise contracts can be somewhat complicated with a number of complex legal matters involved, it’s always a good idea to have a lawyer who specializes in franchises to review the agreement before you sign it.
If any part of the agreement is unclear, or if you don’t understand something, make sure to get your lawyer to explain it to you before you sign. Also, if there seems to be anything missing in the contract, make sure you ask about this as well.
Only sign an agreement that fully explains the responsibilities of both the franchisee and the franchisor, and be wary of any claim or guarantees that a franchisor might make about your potential earnings. While it may be possible to make some projections, a franchisor can never guarantee earnings – and in fact, it’s illegal to do so.
While the franchisor will understandably want to make the sale at this point and get you started in running your franchise, you should never at any point feel like you are being put under undue pressure to sign the contract. If you’re feeling pushed to sign an agreement, you should take this as a red flag.
More Helpful Information
If you’re looking for more information about how much money can make as a franchise owner, check out our blog article, “How Much Money Can You Make Buying A Franchise.”
To find reputable franchise opportunities that have already been vetted by FranNet, visit our resales page.
If you would like personal guidance on how to find and choose the best franchise to achieve your goals, we welcome you to contact one of our FranNet consultants. They know the market inside and out, and have a great track-record of assisting individuals on their path to entrepreneurship. The best news is that they provide this guidance free of charge. To find a consultant in the Central, West Texas or Rio Grande Valley, click here.