Which franchise to choose

Purchasing a franchise offers a proven and effective business model. When analyzing a franchise, you should clearly define what this particular effective method entails. What technologies will the franchisor transfer to you? What know-how will they provide you as a franchise partner? If these are absent or easily recreated, the franchise should not be purchased.

There are a number of explicit and hidden fees that a franchise agreement may include. You should find this out early in the negotiations. A conscientious franchisor usually reports all payments and does not hide anything.

Before you buy a franchise, you must answer the question whether working under the brand of this franchise will give you any advantage. If no one knows the brand and name of the company, then there are few advantages. Interview your friends, check the statistics of Yandex and Google queries.

Request a financial calculation of the return on investment for a franchise project from your franchise sales manager. Firstly, the franchisor should not hide this information, and if it does, it should raise red flags. Secondly, the information received must be carefully checked with the real situation in your region, in your location. So, for example, if the project will pay off in two years only if a thousand people come to you a day, and you have only 500 residents in your village, then this franchise is not suitable for you. You should only buy a franchise whose financial data will meet your conditions.

Every major chain has a history of closures. Naturally, not every open facility is successful and profitable. You need to get acquainted with the statistics: how many objects were closed, for what period, for what reason, and how the number of closures relates to the number of openings of new objects. This information should be requested from the manager and further confirmed by searching the Internet for relevant reviews and publications.

Determine what kind of support the founder of the franchise will provide you with, as it is enshrined in the contract, what liability the franchisor will have if this support starts to “limp”. Well, naturally, you must compare the amount of support with the royalties that you will pay monthly. Most likely, this is the Achilles heel of most Russian franchises. Often, interest in a partner ends after the purchase of a franchise is completed.

Check out the list of mandatory recommended suppliers if there is one. The fact that the supplier of consumables, equipment, furniture, packaging is prescribed is more good than bad. At the same time, this restriction should bring additional benefits to the partner: in price, quality, delivery method and price. Make sure that by purchasing a franchise, you will not receive restrictions that are not beneficial to you.

Visit existing franchise partners. Find out how they are doing, what problems there are within this partnership, what to pay attention to at the start. Find out their experience in purchasing a franchise that you are considering. Usually, these people have nothing to hide, they speak frankly: both good and bad. Most likely, you will not become their competitor under any circumstances and they will not hide anything from you.

In the previous steps, you collected information about closing statistics. It's time to meet these entrepreneurs. With rare exceptions, these former partners speak frankly and soberly assess the real reasons for the closure: they chose the wrong location, they themselves did not invest enough in the business, or “we were not accompanied, we were abandoned, the model was unsuccessful, no one needed the product.”