Do Your Homework Before You Put On Your Apron !!!
Factors to Consider When Choosing a Franchise
1] Reputational Factors
Similar to evaluating a new business partner, there are characteristics and factors that need to considered in evaluating the “personality of the franchise” to see if it is worth investing in.
a) Trust – The most important factor to consider is the trustworthiness of the brand or franchise. A franchise that is well-known, has been trusted by customers and is considered to be a beacon of reliability, will be the biggest blessing for your business. Customers are more likely to hit the ground running if they are familiar with the product, the layout of the shop or premises and the style of service. In business, trust is a vital component to success. Saving time and money on not having to reinvent the wheel will be a bonus if the right franchise is selected.
b) Litigations – In evaluating the suitability of purchasing a franchise, it is wise to look into the history of litigations involving the franchisor. Constant negative press or news stories about the franchisor may be a possible indicator that the brand is not trustworthy and might lead to similar lawsuits for your business down the road. You, as the business owner should consider if that is something that you are willing to take on.
c) Bankruptcy history – A successful franchise should make profits. A franchise that has had numerous past cases of filing for bankruptcy should be red flag. Make sure to evaluate the reasons behind those bankruptcy filings. Everybody makes a mistake now and then. Repeated financial mistakes will be punished in the “jungle of business law”.
d) Political affiliation or agendas – Does the franchisor support politicians or political parties that promote policies that align with your beliefs and values as the entrepreneur. Taking on a franchise that has a completely opposite political ideology as yourself may not be the right fit for your business. How comfortable are you with fending off mass protesters if the franchisor does something that you do not necessarily agree with ? Consider if the franchisor’s political views may hurt your future profits.
e) Corporate contributions to communities and charities – A franchise that is associated with uplifting the community through funding large projects such as an athletics stadium for an under-privileged school or helping to clean the environment, contributing to a philanthropic charitable cause or funding the arts, is a useful indicator of good business reputation. The greatest business organizations in the world are always the ones that strike a good balance between profits and giving back to the world. Aligning your business with a franchise that shares that value will be a great way for you to achieve that goal too.
f) General factors to consider – Start by learning about how long the franchisor company has been in existence. How did it evolve into the successful brand that it is today ? What ups and downs or struggles had to be endured in its business journey ? What are the backgrounds and personalities of the CEO’s and founders. Are the executive directors good human beings that share similar values to you ? Check the press and social media to see if there is more positive press for your franchise.
