Franchise Preparation Tips

When you purchase a franchise, such as a Burger Franchise, you purchase an established brand with proven success. Franchisors offer training, detailed implementation plans, product guidelines, and built-in demand. However, franchise success is not guaranteed. Therefore, before you invest, consider conducting extensive research; review your personal preferences, qualifications, and financial preparation; and the financial requirements of the franchise.

Research

First, review the federal guidelines and regulations and local zoning laws that apply to your desired franchise and location. Then, conduct market research to determine what type of franchise will have the best chance of success in your area. Don’t forget to research the competition. Determine whether your community has the workforce to support your franchise.

Investigate the company. Is the company financially viable, and does it have a strong, supportive management team? Search the Better Business Bureau for outstanding claims. Identify the company’s investment requirements, the overall return on investment, and the average sales growth rate. Then, read the company’s franchise disclosure document completely.

Speak with several current and former franchisees about unexpected costs and the benefits and challenges they experienced. In addition, ask when these individuals saw a profit, and whether they received adequate support. Ask these individuals about the business’s complexity and their turnover rate.

Personal

Because franchises have specific rules concerning menu, décor, and operations, your strength should be in implementing others’ plans. In addition, your management style and expectations should meet the requirements of the franchise.

Evaluate your experience. For example, are you familiar with the type of business, do you know the industry and do you have experience working in this environment?

Finance

Franchises require more than an initial franchise fee and building investment. Because they may take several months to show a profit, you need liquid assets that can support you and the franchise during this initial growth phase. In addition, you may need to conduct extensive marketing.

Franchisors may also require you to spend a specified amount of money on advertising and other services, and you may not have any knowledge of or control over how this money is spent. You must also purchase your raw materials from the franchisor and pay royalties.

If you are financing or seek investors to open your franchise, you should create a business plan. In addition, you should have enough money to cover at least 3-6 months of business expenses and up to 1 year of personal expenses.

Prior to investing in a franchise, conduct research on the company, market, and legal requirements. Then, consider your personal experience, preferences, and financial status. Finally, review the financial requirements of the franchise.