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How to Choose a Franchise

If you’re pursuing your dreams by buying a franchise, choosing the right one is your next vital decision. Here’s how to make it so there are no regrets.

It’s not surprising that you’ve chosen to buy into a franchise to pursue your dreams of owning a successful business. Franchise ownership has many advantages over starting from scratch with a private company, including the fact that the branding, marketing and products (all vital aspects of your business’s success) are already in place.

Hopefully, you’ve already determined that franchise ownership is right for you personally, and you’re well aware of the factors that some people consider to be less desirable about owning a franchise. If you have, then you’re probably very confident in the decision you’ve made to sign a franchise agreement and take on the thrilling role of franchise owner.

Now, the vital question is: how do you go about deciding which franchise to invest in? The following seven tips will be invaluable as you head down that road:

1. Look back at your own skills and experience

As with any business buying decision, buying a franchise is a big step. It’s going to involve committing to significant investment of money, time, and effort, and it’s likely to consume a good portion of your life, at least during the critical first few years of activity. So, don’t take it lightly.

While you’ve already confirmed you have some of the basic traits and personality for owning and running a successful franchise, now it’s time to dig deep into your personal set of skills and experience so you can use that insight to choose the perfect franchise for you.

That doesn’t mean you can’t choose to buy a franchise that lies outside the sphere of what you already know, but realizing that fact and making that decision deliberately will allow you to take into account the learning curve that’s bound to slow you down early on. It also allows you to locate a mentor and/or a team of experts whose deeper experience and skill level can help you make the right choices.

2. What is the competitive environment in the field?

Whatever product or service your new franchise location offers, you’ll need to consider how much demand there is for that offering in the local area. This ties in directly with how much competition there is.

If there isn’t much demand to start with, or if many other locations offer the same products or services, then it’s possible the customer base isn’t big enough for your franchise to be viable.

Fortunately, most franchisors will have thoroughly researched and evaluated these facts prior to making a franchise location available in that area, so you’re not alone in figuring this out. If, however, that doesn’t appear to be a part of the franchisor’s initial plan for getting you started, that should raise a red flag for you: perhaps the parent company isn’t as interested in your personal success as they should be.

3. Don’t downplay the importance of budget

From the outside looking in, it almost seems silly to warn prospective franchise buyers to keep their budgets in mind. But, it’s important to realize that, despite all the research you should be doing and all the data available to you during this process, buying anything is still an emotional transaction on some level. It’s very possible for entrepreneurs who are excited to dig into the business owning adventure, or who have been won over by a slick franchise salesperson’s pitch, to get caught up in the excitement and make some poor decisions.

Since (obviously) poor cash flow is the number one reason why new businesses fail, committing too much upfront is a dangerous risk.

4. Consider how your lifestyle factors in

Will buying a particular franchise require relocating? What sort of work hours will running the franchise require? Even if you’re comfortable with the answers to those and similar questions, is your family completely on board as well?

While buying a franchise could be an opportunity to make a fresh start in many different ways, don’t underestimate the potential for stress and challenges for the business owner and their family if a preferred lifestyle has to be sacrificed to make it work.

Additionally, your lifestyle and how you present yourself should fit the franchise brand as much as the brand fits you. This will be an important step in selling yourself to the franchisor, if it comes to that.

5. Judge a franchise based on its reputation and brand

Think about the franchise. Is it a name that people easily recognize? Does it have a positive reputation that you would be proud to be associated with? You’re more likely to attract customers with a well-established brand that people already know, like, and trust, which can give you a powerful advantage from the start.

Additionally, you need to consider how long the company has been in business, and whether it has a solid business model for the future or if it’s based on a passing fad that could run into trouble in the years to come.

6. Evaluate what training and support are offered

Reputable and successful franchisors will typically offer a good level of training and support to their franchisees. After all, their success depends largely on your success. But, each company handles this aspect of franchising differently, and what may be a perfectly adequate training program for one person may not be sufficient for someone else.

Again, it’s important to evaluate the franchisor’s level of support based on your personal needs, skill level, and experience in the industry. And if it’s not up to the standard you think you’ll need to succeed, don’t try and tell yourself you can “figure it out.”

7. Do your due diligence

Doing your due diligence — thorough research into a company’s history, financial stability, future prospects, and more — is one of the most important steps in buying a business, whether you’re looking at franchises or independent locations.

When researching a franchise, make an effort to talk to current franchisees (who won’t be your direct competitors) to see what they think about the franchisor. Do they feel well supported? Have they found the parent company’s claims regarding income and/or ease of operation to be accurate? Their opinions and experiences will provide invaluable inside information.

Additionally, a simple online search can dig up customer reviews, news stories that shine a light on the parent company’s financial situation and reputation, and much more that can inform your overall view of the franchise and how it will feel to be a part of it.

By following these seven tips, you should be able to make a well-educated decision that can get your franchise owning adventure off to a great start.

Bruce Hakutizwi

About the author

USA and International Manager for, a global online marketplace for buying and selling small medium size businesses. The website has over 60,000 business listings and attracts over 1.5 million buyers to the site every month.


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