18 Questions for Potential Franchisees to Ask Themselves: Part 2
In the first part of this series you considered nine questions any potential franchisee should ask themselves about how to get started in a franchise business. Here are the remaining nine questions you should ask yourself as you start to explore different franchise opportunities.
10. Do I want a new or established system? While an established system may have more support and you may feel more secure about your financial success, a new system may allow more creativity and independence.
11. Do I want a large or small franchise system? About 60% of all franchise companies have fewer than 50 locations, so you'll have a bigger choice if you opt for the newer, smaller systems.
12. Do I want a system with slow and steady growth or one experiencing rapid growth? This changes franchise to franchise, and will often depend on how many hours you would like to put in over the first couple of years.
13. What kind of attitude do I want from the franchisor? Paternalistic? Dictatorial? Collegial? Laid back?
14. How important is name recognition? On a regional or national basis? Maybe in your specific location, you feel a well-known brand name would be a huge draw, or the complete opposite.
15. Will I be happy with one or two franchised units or do I want to own multiple units or develop an entire area?
16. How much can I realistically invest in a franchise (money that does not have to be borrowed or raised elsewhere)?
17. How much should the total investment be? Is it worth it to put more up front and get more in return, or to start small and gradually work your way up?
18. Do I need to find a franchisor that offers a low-interest financing program or has an established third party financing relationship?
Know Before you Go – Non-Compete Provisions in Franchise Agreements
In general, non-compete provisions state that the franchisee will not, during the term of the franchise agreement and for a reasonable period thereafter (typically two or three years), own or be involved in any “competitive business.” What constitutes a “competitive business” will vary from franchise system to franchise system, but most franchisees can generally expect to be prohibited from taking part in any business that offers goods/services that are either identical to or competitive with the goods/services offered under the franchise system. Non-compete provisions must be limited in geographic scope, and generally cover a set radius (usually somewhere around 5 to 25 miles) around the former franchised outlet, and possibly also the outlets of other existing franchisees.
5 Tips for Finding the Right Franchise
So you’ve decided that a franchise is the right path for you? Now comes the exciting part—choosing among hundreds of franchise opportunities. Here are questions to ask yourself to help narrow the field:
5 Rules to Follow Before Entering a Franchisor's Initial Training Program
Here are 5 Rules to Follow Before Entering a Franchisor's Initial Training Program