Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!
Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!
Identify the perfect franchise for you! Take our short quiz Take our free franchise quiz!

5 Tips for Finding the Right Franchise

Contributed by Guidant Financial Group.

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:

1. What captures your interest?

If you’ve always been a gear head, maybe a Jiffy- Lube or Snap-on Tools franchise would be right for you. If you love to travel, it may thrill you to help others with a cruise planning franchise or similar travel-based brand. On the flip side, no matter how great the ROI is, if fast-food makes you queasy, you probably won’t be happy being a burger-and-fries franchisee.

2. Do you want to run a business from home?

Home-based franchises have relatively low start-up costs. Some of the most successful are in the commercial cleaning category (Jan- Pro, System4, and Vanguard are Entrepreneur magazine’s top three home-based franchises for 2013). Tools, lawn care, and travel planning are also great opportunities.

3. Does this product or service have staying power?

Franchises that are hot right now may not be in a decade. Check into recession-proof services (pipes will burst, cars will break down, and people will spend money on their kids and pets no matter what) and franchises that target growing population sectors such as seniors and Latinos.

4. How much do you want to invest?

There are franchise opportunities in nearly every price range from a big- ticket McDonald’s ($1.03M) to home-based, low-startup cost franchises that you can get into for under $10K such as CruiseOne or Jazzercise. Getting a business loan is an option, as is rolling over a retirement account to purchase a franchise. The latter is complex if you want to avoid taxes so it’s best to obtain professional help.

5. Is the franchise a good fit?

When you’ve got your options narrowed to one or two, you’ll want to do some serious homework on the franchisors including talking to current and former franchisees, carefully reading over the Franchise Disclosure Document looking for red flags, hidden fees, and any history of litigation. It may also be prudent to seek the help of a franchise consultant—their services are typically free and they know the industry well.

Once you’ve done your soul-searching about the kind of business you want, narrowed the field, done due diligence on all the details and finally made your decision, take a deep breath and step into your future with confidence.

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Everything You Need To Know About Master Franchising

A master franchise is one that is managed by a master franchisee - an investor who pays the business owner, or franchisor, an initial fee to secure the rights to scale the business under its brand name in a specified region. From that point onwards, the master franchisee acts as the franchisor of the brand within that territory, taking on responsibilities such as recruiting, training and supporting other franchisees in various aspects such as marketing, operations and more. The initial franchise fee that these franchisees pay them can be retained by the master franchisee, who can be regarded as a mini-franchisor, managing and expanding the businesses within the territory he takes on.

Why I Have an Issue with the Forbes Franchise Rankings

The 5-Year Growth Rate and 5-Year Franchise Continuity are both great independent metrics of how a franchise is doing on average. As a potential franchisee both of these statistics are vital for selecting a franchise - you want to select a franchise that will provide you with a high return on investment and which will survive in the long run. I think these are, as FRANdata and Forbes suggested, two of the biggest (if not the two biggest) and most obvious metrics for whether or not a franchise is a “good” opportunity for a franchisee. But how do you use these to determine which franchise is BEST? This is the fundamental difficulty in coming up with a ranking system - it isn’t the difficulty in separating the good from the meh from the bad - it’s separating the great from the good and the best from the great. In the case of these rankings I found it to be pretty difficult to comprehend how they differentiated between the top ranked franchises. For instance, if you look at the difference between Discover Map (Forbes #4), Just Between Friends (Forbes #5), & Seniors Helping Seniors (Forbes #6) they all have extremely close continuity ratings and substantially different growth rates. In fact, in the case of these three, the overall rankings are opposite the growth rate rankings. Seniors Helping Seniors is ranked at the bottom of these three franchises despite having a growth rate that is 31 percentage points higher than Discovery Map and a continuity that is only 2 percentage points lower. This suggested to me that continuity was viewed as the dominant factor. But that logic didn’t hold for the rest on the “Economy Class” Top 10, as BrightStar Care (Forbes #7) had the same growth rate as Pop-a-Lock (Forbes #8) but a continuity rate that was 12 percentage points lower. These comparisons show that these were not the only two factors that went into the rankings, which is understandable, but no other factors that are explicitly listed in their results seem to be major factors.