When you are looking for a franchise you may have stumbled upon a person or two who states they are a franchise consultant or broker. (We like to use the term franchise broker because that is our legal title.) They would have offered their services to help you find a franchise. These services are typically at no cost to you. A lot of people think, why do I need a franchise broker? I can do this research on my own. We are here to answer that question for you.
One of the most important things to know is that most people have a view of franchising as the pinnacle of success. They see it as a sure-fire way to achieve entrepreneur status but with a safety net to guide the journey. Franchising is that for many. But lots of dreamy-eyed entrepreneurs pick the wrong franchises for them and the results can be total financial ruin. The selection of the franchise is a critical piece to a successful scenario. Many people look for franchises only on the basis of being a customer of the company. We have found that’s not a good way of determining if you should invest your life savings in that franchise.
What’s a good franchise?
We often say, “we help people own good franchises”. The next question asked is, “what is a good franchise?” The interesting thing about that answer is that it is different for every person asking the question. A good franchise for one person is another person’s worst nightmare. This is the reason why it is so important to understand the landscape of what you are buying. The results vary widely based on the quality of the match.
Think of it this way, if you are a very analytical and shy person, going into a franchise that focuses on competitive selling, may not work well for you. It’s just like finding the right job. Some jobs you are suited for and others you are not. Since the day to day work you will do is totally different depending on the system, that day in the life of an owner is critically important to match correctly.
Aren’t those systems the same?
Another thing prospective franchise owners don’t often understand is you can have two different franchises offering the same exact service and the experience of the owner can be completely different. Yes, two restaurant franchises that both serve similar food can be opposite opportunities. One requires the owner to be behind the counter and actively managing the store, the other is designed for multi-unit ownership so the owner is managing the manager and doing community networking. There are other differences too. One can have a collaborative culture, the other a control culture. One can have a well-defined inventory management system, the other operates from paper checks. One can have a robust marketing system and the other can have no marketing at all. It’s not as easy as one would think to compare apples to apples.
Business model of the franchise
The next thing that matters a great deal in the franchise selection process is the business model of the franchise. Some franchises are in business to help their franchise owners win in a big way. Through the success of their franchisees, they also win big. Others are in business to lock in a customer who has to buy from them for the life of the contract. The franchise can also add so many fees the franchise owner ends up investing a lot of money to buy a job instead of building wealth. The curious thing about the latter scenario is often those companies are among the biggest names. Buyers just don’t know that. They look at the success of the system and think everyone got the same deal, but they don’t. Late franchise owners are often entering the system at a disadvantage. Not always, the point is, you have to check and know how to check.
Expertise to research a franchise
Most franchise buyers simply don’t understand how to assess the business model and spot those finer details. The franchise buyers are plenty smart– you don’t build the kind of financial position required to buy a franchise by being a dummy. However, they haven’t gone through this very nuanced field before and so they get unknowingly stuck. Just like a lawyer wouldn’t perform surgery well, a professional who doesn’t understand the world of franchising may have challenges picking the right franchises.
Franchise Broker qualifications and team
When you work with an FBA franchise broker, you should know our franchise brokers go through five weeks of training when they launch their business. They are trained on the disclosure documents by attorneys, accountants, and data analyst companies. They use scientific tools to help identify which systems are ideal for you as a person and your market. The systems they use actually give number matches. For example, it could show the franchise broker you are a 95% match for FASTSIGNS. They then help you with a due diligence process, which is in-depth. They provide accountants, lawyers, funding consultants, and other experts in the research process to double-check your work.
This actually helps you make a good decision and be matched with a good franchise- for you. Not only that, the brokers team backs up claims with evidence and professional opinions of people who understand what to look for. It’s a customized process because it needs to be in order to do it well.
We believe this process should be taken seriously. Your hard-earned money should be respected by you, the franchise broker, and the franchise. Doing the proper research upfront to know the true picture of the system is a critical component to entering that system the right way. You should be placed in a system that gives you the highest probability of success, our brokers have the tools to help you find that.
If you are researching franchises to own, we suggest reaching out to your FBA Franchise Broker for support. If you do not have an FBA Franchise Broker, please contact us and we will provide you with one.