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So many choices

Entrepreneur,  August, 2002  by Devlin Smith

PICK IT OUT THINK IT THROUGH WHEN CHOOSING YOUR FRANCHISE.

BIG APPLE, BIG O, BINGO BUGLE ... ACK! YOU'RE STILL IN THE B's! PICKING THE RIGHT FRANCHISE FROM ALL THESE OFFERINGS IS GOING TO TAKE A LOT OF LEGWORK. LUCKILY, WE HAVE ALL THE TOOLS AND TECHNIQUES YOU'LL NEED TO MAKE YOUR DUE DILIGENCE DOABLE.

FRANCHISING INCLUDES DOZENS OF industries, and dozens of companies offering franchises within those industries. How do you choose between two or three seemingly identical franchises to find the right fit for you?

"Understand it's not always about who's the largest franchisor in that industry. The right choice has more to do with the relationship match," says Terry Powell, CEO and founder of The Entrepreneur's Source, a franchise matchmaking company in Southbury, Connecticut.

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This match, says Powell, involves harmonizing your expectations of training, support and goals not only with those of the top people in the franchise organization, but also with the lower-level people you'll interact with on a regular basis if you join the system.

The people factor was an important consideration for Mark Strayer, a Mission Viejo, California, Maid Brigade franchisee. Strayer, 45, thoroughly investigated three residential cleaning franchises before selecting Maid Brigade. "I went through every single person in their organization. By meeting with the different people I'd be working with, I was well-attuned to what goes on behind the curtain," he says.

Strayer also spoke with existing franchisees in each different system about their personal experiences, expectations and successes. In the end, territory was the deal-breaker for Strayer, who wanted to open a franchise in Southern California.

Even after conducting thorough research of all possible franchises, feeling buyer's remorse about your final choice is normal. Powell warns all new franchisees not to give in to doubt too quickly after signing on with a franchise system. "Very rarely does the business itself determine whether or not you'll succeed," he says. "Give yourself at least a year to build the right foundation."

RELATED ARTICLE: In the know

GOT QUESTIONS? TRY GRILLING FRANCHISEES FOR ANSWERS.

YOU'VE FINALLY NARROWED YOUR franchise search. But have you asked the right questions? How do you know for sure?

Tap your best resource: the franchisees who've been there. To get you started, we sought one--Harris N. Terry, 27, a Back Yard Burgers franchisee in Madisonville, Kentucky--to answer your burning questions.

How did you know this was the right franchise for you?

Extensive financial, market and demographic research. There's a huge demand for quality products in a quick-service setting. Back Yard Burgers has a strategic position in the market.

Have you ever regretted buying your franchise?

No, but one challenge is managing and maintaining labor. We raised our hourly pay above that of the competition; this has drastically decreased our turnover rate. Improvement in customer service saves us money in the end.

What questions did you wish you had asked a franchisee?

I wished I had asked more regarding the time frame from the day the agreement is signed to the day the doors open for business.

What are the most crucial questions to ask a franchisee?

Where do you see the concept in 10 years? What are annual sales per store? What advice do you have on financing? What do you look for when

selecting a site? What insight do you have on managing labor?

Did you have any prior experience in this industry? Is that essential?

I didn't have much restaurant experience, [but] Back Yard Burgers has a training program, which was helpful. What is essential is a desire to learn, work hard and adapt to changes within the industry.

ONLINE EXCLUSIVE

Psst! Want to find out more about franchising? Visit www.entrepreneur.com/findfunding to discover five great ways to finance your franchise.

WATCH YOUR STEP

HOW TO AVOID 8 MISTAKES FIRST-TIME FRANCHISE BUYERS OFTEN MAKE

1. LOSING SIGHT OF WHAT YOU WANT. It's easy to lose sight of your goals when hit with the franchise hard sell. Know what you want, and avoid franchises that don't meet your criteria.

2. GETTING IN OVER YOUR HEAD FINANCIALLY. Franchises are expensive. There are upfront fees, equipment costs, royalties and more. Know how much you can afford to spend on start-up. Write out a business plan showing financial projections, and stick to it.

3. NOT GETTING FEEDBACK. Seek people who can evaluate a company objectively. Visit existing franchisees as well as some who have left the system. Ask them what they like and dislike about the franchise.

4. FAILING TO READ THE FINE PRINT. You can't afford to ignore information that can help you make the right decision. It's essential to read the Uniform Franchise Offering Circular (UFOC) and other related documents carefully.

5. BEING PENNY-WISE AND POUND-FOOLISH. Pay to have a qualified lawyer and an accountant read the UFOC with a fine-toothed comb. Skimping on professional fees now could cost you thousands later.

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