Discovering the ideal franchise

Have you already decided which franchise to invest in? Not yet? Well, don’t expect to find the answer in the following lines – this is your decision, and yours alone. What you will find in the following lines will be the sources in which you will have to immerse yourself to find the answer to this question of finding your ideal franchise. Without doing your homework, that is, researching the right sources, you may end up making the worst decision of your life. Or the most expensive, at least. So don’t get too excited yet, or try to find shortcuts to this task. Take your time and use not only your heart, but your head as well. Investigating means looking beyond the sales pitch of the franchisor’s seller or broker and delving into the system of the franchises that managed to be on their shortlist. That is, study their operating manuals, their training programs, advertising programs, field support programs, their financial reports, visit their headquarters and talk to other franchisees of the systems. This way, you will be able to make an informed decision – and not one based on the design of a brochure. A quick way to debug franchises is by applying the 2×3 or 3×2 rule. This rule establishes that a franchise worth considering – in terms of maturity and therefore risk – must either have 2 locations and be in operation for 3 years, or have 3 locations and be in operation for 2 years. As simple as that! Finally, make sure you understand not only the business in front of you, but the franchise in question.

The Sources

Choosing the ideal franchise – for you – is going to take time, money and a lot of information. One way to save a lot of time, and therefore money, is to look for this information in the right sources. And although the only source that we can recommend, without fear of being wrong, is our portal ConexiónFranquicia.com, we suggest the following generic sources of information: Print directories: the so-called “franchises” are one of the best places to start your search and analysis of options. In a franchise, the information from each system will be synthesized in a few lines and even distributed in basic reference fields, such as: category, year of incorporation, year of first franchise, entry fee, required liquid capital, total investment, royalty, advertising fee, available territories, etc. This information, however, can be misleading, so do not trust what you read in these publications. Web pages: there are millions of web pages that will respond to the search “franchises” - 16.7 million, to be more precise. Of this ocean of information, most of it will literally be garbage. So, if you choose this route, we suggest you start your navigation by visiting the chambers and franchise associations of each country that occurs to you. Also remember that most of these sites charge to “feature” and rank” franchises, so their judgment will not be exactly impartial.

Fairs

Fairs are, perhaps, the most truthful and enriching source that you can access. At a franchise fair or exhibition you will be able to evaluate, live and direct, dozens - if not hundreds - of options. In addition to being a great source of brochures and business cards, you will be able to engage in private conversations with representatives. Even the same owner of each system. And remember that they will want to hear from you as much as you want to hear from them. Of course, we warn you that under no circumstances should you buy a franchise at the same event. Think about it with your pillow – and with a lawyer and an accountant, first. The most relevant fairs for Latin America are: Brazil (which is the largest in the world), Mexico, Valencia (although it has recently lost ground compared to Madrid), Miami and Argentina, in our opinion.

The Brokers

Regarding working with a broker that provides you with information or presents you with specific investment opportunities, while it is not a bad option, please remember that these expert salespeople earn a commission from the franchisee they represent. So the franchise they assure you is “perfect” for you, it may simply be the only one they have in their portfolio. Or the one that pays them the most commission.

Make no mistake

Make no mistake, buying a franchise is not much different from buying a house, a car, graduate school, or even getting married. Would you buy or choose any of the above based on a brochure? Based on someone’s sales pitch? To your good sense of smell – without real information and data? Well, neither do we… Also keep in mind that a good franchisor will be as cautious in choosing you as you are choosing him. Since your entire system (and your brand) can come down, or at least damage, due to a bad franchisee. In this sense, if the franchisor does not insist on meeting you personally and visiting you at their headquarters, worry. And when evaluating your potential franchisor’s services, always separate – and always ask about them – pre-opening (i.e., pre-operational) services from ongoing support services. These services will vary from system to system. But everyone should give special attention to the training they offer. At this point, speaking to a few franchisees in the franchise network will be your best source of information. If the franchisor refuses to give you a detailed list of its network of franchisees, with names and contact numbers, make no mistake… Run away!

“Location, Location, Location”

Once you are more or less clear about your franchise options, you can start thinking about the type of stores and locations that are ideal for offering your products and services. In this regard, as in all other aspects we have discussed, do not hesitate to consult with an expert real estate agent. An expert agent will not only look for a nice location with adequate traffic, but will also take care of the commercial zoning and development potential of the area in question. And consult with your franchisee before giving a deposit, if you want, of course. And as the gringos say, remember that in real estate everything is location, location, location.