When choosing the best franchises to buy, there’s a few key things to consider when deciding on the best franchise opportunity that’s right for you and your family. If this is your first business or franchise that you’re looking to own, this information will flat out be huge. If this isn’t your first rodeo, you will still gain a ton of valuable insight.
The first thing to consider when looking at franchises to buy is the overall brand recognition and reputation of the franchise. The top two franchises in the world are McDonald’s and Subway and they have some of the best branding in the business. Good branding can give you a great advantage.
On the other hand, if the company doesn’t have popular branding like a Subway franchise, it would be wise to turn your efforts and evaluate the leadership of the company. Find out what their track record is and know all their past successes and failures. Be knowledgeable of any litigation history. What you’re really looking for is the integrity of the leadership. You want to know real quick if the leaders truly care about the success of their franchise owners or are they just looking to fatten their wallets.
The next thing to consider in finding the best franchises to buy deals with the territory restrictions of the franchise. How are they defined and how big are they? Is there a time period where territories can be re-negotiated? You must know everything about the territory restriction as a possible franchise owner because sometimes the territory you have can make or break your business. If you can get a franchise with no territory restrictions, then that would be great. A lot of online franchise opportunities fall in that category because there’s no way to restrict the internet.
Another consideration in choosing the best franchises to buy is the structure of the royalty fees. Most franchises fall in the 2%-10% range of royalty fees and they are based on gross sales, not net profits. That can be detrimental to the business losing that much off the top before paying for all other costs associated with running a business. Furthermore, some franchises even have minimum amounts no matter if your business didn’t produce enough cash. It’s no secret that most times you have to own multiple franchises to make great money and royalty fees definitely are a part of that.
The final consideration to talk about in finding the best franchises to buy is the initial cost of entry, specifically any real estate that needs to be bought and/or large equipment that needs to be leased. This is a huge expense and can eat of all of the profits if the franchise owner doesn’t follow the system and understand everything first. One franchise I know personally has to sell 5000 units per month just to pay the rent. That’s not even including all of the rest of the expenses… and hopefully some profit in there. Home-based franchises are really becoming popular because they don’t have to worry about getting real estate and leasing large equipment.
Bottom line is that searching for the best franchises to buy can be an overwhelming task with all the choices that are out there, but really the best thing you can do is choose the right franchise for you that you are passionate about and is in alignment with your values and morals.