Do Your Franchise Research
Not that you have made the decision that you want to invest in a franchise you must do your franchise research
. Of course you have done your own research and know you may need enough savings to support yourself for a year as the business is a new business and it may not start making money instantly. Also you know what type of franchise you are interested in. So now is the franchise research part of the deal.Since the franchise is only required to give you the disclosure documents at least ten days before you sign any agreement with them, you will have to do some background checking first.
Getting information is fairly easy on the internet. There is a lot of information available about people and companies so you might want to start there. Find out about the history of the company and its owners or founders. If the company is publically traded there will be a wealth of information available. Once you have this information you will then have to analyze it. You may require assistance from an accountant or some one who specializes in franchises.
You also need to go out and visit with some of the other similar businesses that are in or near the area of the franchise you are interested in. This will allow you to see who your direct competition is in the area. Also visit other franchise locations of the same franchise and talk to the franchisee to find out their experiences with that franchise. You may have to travel to do this unless like some franchises that are within blocks of each other, these may be located in more distant locations. After all a neighborhood can only support a limited number of spas.
Depending on the type of business that you are interested in do some of your own market research. Some market research is a pretty easy thing to do. For instance, you might take a survey of a competitor by standing outside their establishment and counting the number of people who pass by the door. Then tally the number who actually goes into the establishment. Count the number of cars that pass by on the street. You are doing this to find out the potential customer base the location has. Because many of the customers will be spur of the moment customers. This only applies to some establishments like an ice cream shop or donut shop. Others like a dry cleaners or an oil change place will draw customers who have that specific activity in mind. But even they will have some spur of the moment customers who may be looking for that type of location.
If you can, talk to some of the customers. Find out why they visited that establishment. You are doing this to find out if your location has potential.
You have to do your franchise research and do as much research as you can before you receive a disclosure document so you are prepared.
Do Your Franchise Research
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