Glenn Sandler Talks 9 Things to Look for When Buying a Franchise

If you're thinking about buying a franchise, then you'll want to do plenty of research. There are a number of things that you should look for when comparing different franchises. The following are some of the more important things you should consider before you decide to invest:

1. A history of successful franchising

Just because a business is successful does not mean its franchising system is. Some companies have a poor record, perhaps because their products and services simply didn't translate well in other locations, or because they provided poor support to their franchisees. Be sure to look into the numbers, including how many franchise locations there are, whether their locations have increased steadily since they began franchising, and how many have failed versus those that remain in business.

2. A product or service you can get behind

You should care about the product or service that you sell. Don't just invest in a franchise because of the brand name. If you don't care about the products or services, it's going to be difficult for you to get any fulfillment out of running the franchise. Look for businesses whose products or services you can get behind.

3. A strong brand identity

There's nothing wrong with taking a risk on a business that has just begun franchising. This can be quite rewarding if you choose wisely. However, it's less risky to invest in a franchise that has already fostered a strong brand identity. This will make it much easier for you to hit the ground running once you open up your first location.

4. The initial costs of investing in the franchise

The initial costs depend heavily on the type of franchise you're investing in. Most established franchises will give you an estimated range of how much you're going to have to spend. However, these costs do vary depending on different factors. For example, if you're trying to open up a franchise location in the middle of a large city, rent is probably going to cost you more than it would if you were to open that same franchise on the outskirts of a small town.

5. The additional costs of investing in a franchise

Look at the different fees that you will have to pay as well. You'll most likely have to pay a percentage of your profits toward royalty and marketing fees, while also paying a flat franchise fee.

6. Any history of litigation

You might want to think twice about investing in a business that's mired in lawsuits, as it could end up causing the business to shut down. The franchise disclosure document should outline any pending litigation against the company, its owners, or upper management. Another thing you want to watch out for is an owner that has been or is going, through bankruptcy.

7. A thorough training and education system

A good franchisor provides its investors with a thorough training program that teaches owners everything they need to know about their products or services, as well as what they need to know about running a franchise. Most franchisors will assume that many of their investors have no prior business education or experience and take this into account in their training program. Look for franchisors that not only require you to take courses, but also require on-site training as well as ongoing educational opportunities such as seminars, additional classes, and meetings.

8. A strong support system

A franchisor that boasts a strong support system helps reduce the risk of failure. Look for a franchisor that not only offers thorough training and education, but that helps guide you throughout the entire process of opening up your first franchise location. A good franchisor will help you find a suitable location and help you set up for the opening. You should be able to seek advice or assistance from the franchisor throughout the lifespan of your store. Some franchisors will even offer a mentorship program, which is a particularly strong indicator of a good support system.

9. Happy franchisees

A franchise may look perfect on paper, but that doesn't mean it's perfect out in the real world. Visit some of the existing franchise locations and speak with the owners to determine if they are happy with their investment. Find out whether they have a healthy relationship with the franchisor, and whether the lines of communication between them are open and transparent. If you speak to several franchisees that are unhappy, you may want to consider other options. Running a successful franchise may not be worth it if it's at the expense of your happiness, after all.

If you're seriously considering buying a franchise, then be sure to look into these nine things when researching and comparing various franchises of interest. This will ensure that you make a sound investment in a franchise that suits your specific wants and needs.

About: Mr. Glenn Sandler is an entrepreneur in the financial space, operating as the founder and CPA of GI Tax. Mr. Sandler specializes in Forensic Accounting, Financial Statement Analysis, Business Consulting, Income Tax planning and Income Tax Preparation. Based in Florida, Glenn Sandler strives to understand his client’s financial situations so he can help clients reduce their tax liability.

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