EDITOR NOTE: This is a post from The Franchise King®, Joel Libava. Joel will be writing a blog post monthly for Franchise Direct.
If you’re a detail-oriented person, this article is going to be tough to digest.
If you’re not into “the details,” then what you’re about to read should be pretty easy to swallow.
But most importantly, if you’re in the process of investigating franchises–or are about to, this article will help you get through what’s usually a 45- to 90-day process in one piece.
Franchise Purchasing
First things first. Since this is an article about numbers, let’s look at one: 3,000+. That’s the approximate number of franchise opportunities that are currently being offered in the U.S.
Imagine going through all of them one by one. Now imagine gathering all the financial data about them... getting some details. It would take months... years, maybe. Especially if you’re a very detail-oriented person. But, here’s the thing. You don’t have to look at every single franchise business opportunity.
Tip: You only have to look at the franchises that are a fit for what you bring to the table, what you’d like your business to be able to do for you, and what you can afford.
The bottom line: Try not to allow the sheer number of franchises being offered overwhelm you.
Now, let’s say that there are 4-5 brands that dominate this space.
Deciding
Once you start to narrow down your choices, and you’ve only included ones that are fit your budget, it’s time to dig in and do some data-gathering.
You need to get some details. But, not too many.
For example, let’s say that you’ve decided to pursue franchises that offer tax-related services. You decide to do some “comparison shopping.” In your mind, this consists of creating a spreadsheet of sorts. You add-in the information you’ve found on each franchise; territory size, royalty percentages, investment amounts, their franchise fees... things like that.
Then, you start comparing. Your mind starts to focus on certain things.
“Franchise A has a franchise fee of $35k, but Franchise B-and Franchise E have a $25k franchise fee.”
Then...
“Franchise D has a territory size of 175,000 people, but all the others have territory sizes of at least 225,000 people.”
And...
“Franchise C has a total investment range of $125k-$135k, while Franchise A and Franchise E have investment amounts in the $155-$175k range. “
Etc.
What should you do?
Close it.
Close up your spreadsheet (saving it of course) and forget about the details of the franchises you’re interested in. For now.
Reach Out
If you haven’t already done so, contact the franchisors. Arrange to have a call with each one. Ask them why you should choose their franchise opportunity. Forget about the cost details during your first call. Instead, get to know them a bit. Find out what their actual business model is. Find out what they’re looking for in a franchisee.
Ask them:
- How they get customers
- How they help you get customers
- How they support you
- How their marketing and advertising works
- How they are positioning themselves
Those are the things you want to know.
The costs are the costs are the costs. The important thing-when it comes to cost, is this:
What’s left for you after things are all said and done?
An Example For You To Think About
For instance, what if “Franchise C” has the lowest up-front cost out of the 5 franchises in the tax-related franchise sector you’re starting to learn about-real low royalties, too, but their marketing isn’t working? (Which you found out about during your in-depth research.)
If that’s the case, all of a sudden, “cost” isn’t so important.
Think about it.
Stop obsessing about cost.
Start obsessing about your bottom line.
The Franchise King®, Joel Libava, is a franchise ownership advisor and the author of several books on franchising including these eBooks.