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Congratulations, you have decided to build the wealth of generations buying your first business franchise. In most categories, such as the food service, retailor medical sERVICE, you have more than one opportunity to invest in a franchise. It is much easier to leave a bad job than the wrong franchise or one bad rent. To determine which opportunity is right, you have extensive research and interviews ahead of you. Here are some things to keep in mind.
Numbers
Each franchise lists estimated start-up costs either online or on a readily available device documentincluding its fees and royalties, construction costs, real estate and more. If this is not available, run fast. If it is, honestly estimate what capital you can contribute and how much you can borrow. Each franchisor must also list a franchisee's potential profit in the Item 19. Carefully compare item 19 of the various franchises you are considering and, as you check references with existing franchises, double check those numbers.
The franchise should be so successful that you want to re-invest to open more locations. The best franchises self-finance new locations, complicating your investment. Imagine paying to open the first three locations, and then those three locations fund three more. These six units finance another six, and so on. This creates the wealth of generations.
References and growth
They are existing Franchises so pleased with the franchisors and their investment that they are opening new units? If not, run. This step also helps you find the mentors. Success leaves clues, and you can learn from the successes and struggles of existing franchises to ensure your own profitability.
If the franchisor is not opening more locations and investing in the best possible people and PROCESSES for franchise success, sprint for the hills. The franchisor knows better than anyone the success of each country.
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Which industry?
We once saw a potential Halal guys The franchisee questions whether he really had to use halal ingredients – it's in the name and a faith-based dietary law. (Guess who didn't get the territory?) Your passion, or lack thereof, will be contagious. I suppose a vegetarian can successfully run a hamburger business, but why?
Know the industry and TRENDS, especially to understand the franchise's position in the industry. Maybe you're a restaurant manager looking to become an owner – or master franchisor for a territory. We have clients who operate multiple foodservice brands — they already understand the business and the importance of a playbook.
Alternatively, maybe you've been in the restaurant business forever and never want to see a fryer again. Or you are a corporate executive who wants to deal with people, there are opportunities. We are working with a team that has operated multiple restaurants Make for years and now they are opening GLO30 skin care units. We have also opened several food franchises PayMore Electronics stores and vowing never to open another restaurant franchise.
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Brand reputation
The best time to become a franchise is early in the life of a business – it was much more profitable to buy McDonald's restaurant number 50 than 25,000. But you also might not want to be store number 5. Ask about Extension plans, how other franchisees have fared – and what they think a franchisee needs for success.
Research both the business and him head. Google the business, find some franchises and talk to them. Most will be happy to talk about their experiences – if you succeed, it will only enhance the brand of their units.
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Support and exit strategy
The point of buying a franchise is that you are buying an established one business model, and the instructions and materials needed to start and run it. Make sure these services and support materials are up-to-date and what you need for your particular business. Start by checking the business culture. Is there a spirit of cooperation in the franchise? Are franchisees encouraged to talk to each other?
Regardless of your experience level, you want communication with The C-suite. Will the corporation respond within a reasonable amount of time, or are they just interested in your royalties and fees after the training period? As you become successful, are they open to your ideas?
Remember, the first bite of the apple is a hugely profitable franchise business that gives you a life you only dream of. The second bite at the apple is the day you sell this business for 7-10 times your annual earnings, creating the wealth of generations. You need to know how to best shape your business to ultimately win. Always keep this option in the back of your pocket – and in your mind.
Smart franchising with Fransmart
We discuss this and other topics on our new site “Smart franchising with Fransmart” podcast, which launched on April 2, during my conversation with the industry legend Greg Flynn. Flynn is the Founder, Chairman and CEO of the world's largest express service operator food franchisesFlynn Group LP, which is diversifying into Planet Fitness locations.
It's the first of 10 weekly podcasts with guests, including Don Fox, former CEO of Firehouse Subs, discussing his 50 years in the restaurant industry; Patrick Galleher, Managing Partner for Investment Banking Boxwood Partners, who has led transactions for numerous franchise companies; and Aicha Bascaro, Founder and CEO of the American Franchise Academy. You can subscribe here.
Finding the ideal franchisor is not much different from the ideal new job – but remember, you're not buying a job, you're buying a life-changing wealth strategy. Over time, you won't be managing a unit, but you'll be keeping track of the people who do and who pay you to do so. The process starts with time, research and some honest conversations.