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Buying a franchise should not be a spur-of-the-moment purchase — for either the franchise company or the prospective franchisee. Each party has a stake in knowing as much as possible about the other before going into business together. Are you ready to buy a franchise? Let’s find out…

Related: Ready For A Career Switch? Consider A Franchise

When you buy a franchise, you get a business partner. You want them to add as much value as you. And it’s up to both parties to thoroughly check each other out before signing a contract that binds you together. Typically in a franchise agreement, the franchisee agrees to pay an upfront fee, as well as continuing fees that include royalties and costs for advertising and marketing. What the franchisee should get in return is a tried-and-true system for running a profitable business, as well as training and ongoing support to help you learn your new business and become an expert at operating it. Your responsibility includes reading as much about the franchise company as possible, consulting many experts along the way, including a franchise coach, and, as you get closer to a purchase, a franchise attorney. In turn, the franchise company executives will be getting to know you. After conducting several interviews, they will arrange for you to visit their company headquarters for a “Discovery Day.” During these early conversations, it is up to the franchisee, to interview the executives right back. Find out what you need to know about their track record and their system to see if it’s right for you. Many franchise companies contract with outside vendors to use specialized online questionnaires meant to assess the skills and suitability of the prospective franchisee for this particular franchise. Franchise companies typically pay a fee for the service, and they get a substantive way to test the skills and experience of prospective franchisees to see if they are a good match to their company. For Greenville, S.C.-based ARCpoint Labs, if prospective franchisees don’t score high enough on the test they use by Franchise Navigator, they generally do not move forward in the process, said Randy Loeb, vice president of franchise development for the company, which offers drug, alcohol, DNA and forensic and wellness programming. Not all companies use these programs as elimination rounds, but prospective franchisees should view these vetting exercises as best for everyone involved since no one wants to put their hard-earned savings into a franchise business for which they are not suited. The mutually beneficial investigations help ensure new franchisees can thrive, so that by the time they purchase a quality franchise, they’ve optimized their odds of success.

One of the great benefits of going into business for yourself with a franchise is that the franchise is ready to roll on a well-traveled road to profitability. But how many franchise companies actually pay you through your ramp-up phase? Are you ready to start a franchise? All franchisors tell you upfront exactly what their system will cost, from the franchise fee to the costs to set-up shop, royalties, advertising, and so on, which is part of the attraction of a franchise. You know exactly how much money you need to get going. No surprises to throw you off course down the line. You also need enough money to cover your living expenses for up to a year or more until your business starts to earn a profit. The executives of Money Mailer, a direct marketing franchise company, believe so strongly that their concept is a winner, they have started a new program that actually offers financial rewards for coming on board their system. Under Money Mailer’s seven-month-old GPS program — Goals + Processes + Systems — new franchisees pay no royalties for the first two years plus the company pays them a $2,500 bonus for completing their expense-paid field training and pays a performance fee of $2,500 each month for the first year, which means new franchisees take in $32,500 at a minimum just for meeting their goals in year one, said Dennis Jenkins, vice president of licensing for Money Mailer, which has 175 franchisees plus 51 company units, now available for licensing, in 38 states. “We make our money on the production side of the business after the ads are sold,” he said. As a result, Money Mailer has “every financial incentive to help the new franchisees become successful as quickly as possible.” “GPS allows franchisees to focus exclusively on building repeat monthly business,” he explained. To make this program work, selecting quality franchisees is paramount. What’s most important is a good work ethic, he said, noting one-third of their franchisees have no sales experience. “Our challenge is not finding candidates that can write a check for the $75,000 franchise fee – that would be easy – but to find top quality talent that merit the six-figure investment we make in each new GPS franchisee,” Jenkins said. Money Mailer’s intensive training includes:

• Money Mailer University (MMU) – five days at corporate headquarters in Orange County, Calif.
• Three-week training camp, beginning the Monday following MMU, at a company operation, working with a team of trainers. The schedule permits the new franchisee to go home on the weekends, and the cost is covered by Money Mailer.
• Field training: When they return to their sales territory, they work “hand in glove” for two weeks with their regional sales manager, a full-time employee of the company.

In addition to their field support, Money Mailer has a dedicated customer care “concierge,” handling advertising creation, production, distribution and all digital placements, including smart phone applications and social media. Since the company instituted GPS, not only has lead flow dramatically increased, but the company also attracted the interest of a large venture capital firm. Chicago-based venture capital firm, PSP Capital Partners, founded by Penny Pritzker, currently U.S. Secretary of Commerce, purchased a majority interest in Money Mailer last April. “We are very excited about the future,” Jenkins said. “PSP has asked us for a very aggressive growth plan that takes the company to the next level, including the addition of 150 new franchisees over the next two years.

What do you think is the No. 1 goal of franchise companies? Like any company, to make as much money as possible, but they need good franchisees to accomplish this goal. This is why buying into an effective franchise system can be such a win-win proposition.

The new franchisee gets to recharge his or her career, while the franchise company works to attract highly qualified, talented professionals to its ranks. The simple fact is the better franchisees perform, the more money everyone makes. The advantage of franchise ownership is you get a time-tested system. How well franchisees learn and execute the system is critical to their success. As a result, franchisors place a high priority on selecting new franchisees wisely and getting them up to speed as quickly as possible with training and support. ARCpoint Labs, for one, considers the selection process, of utmost importance. “We’re very selective when we grant a license to franchisees,” said Randy Loeb, vice president of franchise development for ARCpoint Labs, a Greenville-S.C.-based company which offers drug, alcohol, DNA and forensic and wellness programming. Besides relying on franchise consultants or coaches to bring them well-qualified candidates, ARCpoint uses a written test developed by Franchise Navigator to vet prospective franchisees for the right “entrepreneurial skill sets,” Loeb said, including, leadership, time management and consultative sales ability. When a franchise inquiry comes in, “we give each candidate an electronic brochure and walk them through the business model,” Loeb said, adding that within seven to ten days they will complete the Franchise Navigator assessment. “If the prospective franchisee doesn’t meet ARCpoint’s qualifications, I suggest they look at another franchise that may be a better fit for them,” Loeb said. “ARCpoint is probably one of the most sophisticated business models in franchising today,” he said. Consequently, they want people who can excel with their business model. “We’re looking for quality folks who will effectively represent the brand,” he added. ARCpoint currently has nearly 100 franchises open, and 100 more territories sold, and scheduled to open in the next few years. After the franchise candidate makes the decision to join ARCpoint, Loeb said, it’s all about the training. ARCpoint takes one and a half years to fully train franchisees, using easily digestible modules. “We spoon feed them,” Loeb said, which allows franchisees to learn one subject matter before moving onto the next training module. In addition, the company hosts several monthly webinars to give franchisees updates, improve their skills and stay current with testing rules and regulations. The company keeps a close eye on new franchisees to help them succeed. “We have a very detailed rollout,” he said. “We automatically know early if something is wrong so appropriate changes can be made to help franchisees succeed.” Following the franchise system is a critical component to their success. “We’re birddogging franchise owners all the time to make sure they’re following the system,” Loeb said. “Franchisees succeed because our system works.”

Running your own business has a magnetic allure. What’s not to like? With a business of your own, you never have to polish and send out a resume again, and you get complete control over your life. Of course, your living rests entirely on your shoulders. If you have little or no experience in business, the odds against you can seem overwhelming. So, all too often, folks dutifully stick with the safe 9-to-5. But you don’t need experience in the business of your choice if you start with a franchise because their experts will train you and show you how to run a business that has a proven track record. If you hit a few roadblocks, their support team is with you all the way. After all, the franchise company won’t succeed unless their franchisees do. When you start your own business with a franchise you get all the know-how you need. The most important part of the whole process is selecting a franchise whose way of doing business matches your interests, skills and experience. Here is where a franchise coach can come in handy, since they have knowledge and experience in the industry, as well as a list of businesses that have worked well for their clients in the past.

So how do you know if you’re a good candidate for a franchise? Take the quiz!

1. Are you willing to do your research?

You will need to thoroughly research any franchise you purchase. This requires you read the Franchise Disclosure Document, which all franchisees are required by law to provide to potential franchisees, and talk to as many people associated with the franchise as possible, from its executives to its franchisees. Not only do you want a franchise with a good track record, but you want to make sure it’s a system that suits you.

2. Do you have enough capital?

Starting a business with a franchise offers you the great advantage of knowing upfront all your capital needs. Don’t forget to factor in what you will need to pay your cost of living until your business reaches profitability.

3. Are you determined to work hard to get your business up and running?

The start-up phase can be challenging as you learn the new business and your market. Can you stick with a problem and work through it until it’s solved? With all the support and expertise available through the franchise, you can be sure you’ll get all the help you need, but you have to be willing to put your shoulder to the wheel.

4. Can you call for assistance when needed?

While a franchise offers an experienced support staff to help you, it only works if you’re willing to ask for help when you need it.

5. Can you accept paying regular franchise royalties and other fees?

These fees are the price you pay for getting a proven system and support staff, as well as an advertising/marketing campaign, to help you become successful. If you might resent paying for this help down the road, a franchise isn’t for you.

6. Are you willing to trust the system to work?

The franchise system, perfected over many years, is the way this business is designed to operate. You have to follow the system to maximize your success. If any part of the system doesn’t suit you, don’t buy the franchise. If your answer is no for two or more questions, a franchise may not be the best choice. But if you’re ready, there’s no cost to begin investigating, and you may find the business of your dreams just a click away. 

When you buy a franchise, you expect training and support, but not all franchise companies are created equal in this department. The great selling point of a franchise is it allows you to enter a business in which you have little or no experience and start a completely new and better career. So you have every right to expect good support and training. The best way to learn about the support franchisors provide is to talk to franchisees. They will tell you if what they got was sufficient to teach them how to run their business. How much support and training should you expect? An initial training can vary from three days total to two weeks upfront and two weeks a few months later. The latter example is an outlier — extra training in a business that requires technical expertise. More typical is a week before you open at corporate headquarters to train you how to run the business. Some franchisors will train just the owner, and the owner is expected to train employees. Some offer employee training. Usually, you can purchase additional training if you think it’s necessary. After the initial training, virtually all franchise companies offer various levels of ongoing support, that is, someone who answers your calls to help you troubleshoot various issues as they arise. The person at the other end of the line might be with corporate or a fellow franchisee, who can be a particularly helpful source of support since they’re out there in the trenches with you. The franchise company may set up franchisee support groups, which allows you to form a tight bond with a small group of franchisees you can rely on for assistance. One way this group might function is to have a standing conference call where folks can share stories and get support to help them deal with various issues. Many franchise companies have a franchise advisory council, an elected group of franchisee, who take the lead in coordinating the direction of resources. Learning is a two-way street as good franchisors will pick up new ideas from their franchisees on new efficiencies discovered in the field. The advisory councils provide a great conduit for information sharing. Most franchisors divide up their territory into regions, each with its own representative who is responsible for providing support. Some offer master franchising, where some franchisees are responsible for supporting individual franchisees in a region. For example, as an Area Representative with Always Best Care, we spend more than 60 hours a week supporting 11 franchisees in our territory. Some franchisees need more hand-holding than others, but they know they have someone who will take their calls and help them resolve day-to-day dilemmas. Another opportunity for professional development is at an annual or biannual conference. The franchisor’s conferences offer an excellent way to stay up to date with operations. The franchisor might also offer a listserv, through which you can connect with all franchisees in the system.

If The Support Is Available, Use it!

It’s not enough to know the support is available, you must avail yourself of the service. One of the biggest problems I’ve noticed among new franchisees is a reluctance to ask for help. Perhaps they want to be independent or they think that’s just the way the franchise works. You have to pipe up to find out if perhaps there is a better way that will solve a problem you may be having. Whatever else you do, don’t buy a franchise without first clearly understanding the level of training and support you can expect to receive.

Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today! Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a business coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at [email protected] or at (484) 278-4589.

If you want to go into business for yourself, one of the best ways to get started is to buy a franchise, particularly if you have no experience in the business you choose. A franchise can lower the risk of starting a new business for two main reasons. First, you can learn everything you need to know to succeed before you pay out any money, and second, the business comes with a time-tested model that has been shown to work for dozens, if not hundreds, of people before you. All you have to do is operate the system as designed. During your period of investigation, you learn everything the system entails. If you don’t think you can do any part of it, this is the time to opt out. Once you buy the business, you should be comfortable with the system and have confidence you can follow it. Don’t despair if the first franchise you investigate has a system that doesn’t work for you. There are franchise systems to suit every range of talents and experience. For example, if you don’t like to cold call potential customers, you shouldn’t buy a franchise that requires that kind of sales. There are plenty of franchises in which the customer finds you. If you don’t want to hire employees, don’t start a business that will require staffing to grow. There are plenty of choices where you can work on your own. A good franchise coach can help steer you toward businesses that suit you best. The one thing you want to avoid is hitching your star to a business you think you can remake to suit your skill set. We had a client who was once the fastest growing franchise in his region who for some reason didn’t want to hire the necessary staff to cope with customer demand. As a result, he ended up strangling his business. Instead of growing, he stagnated. Another reason people sometimes don’t want to hire necessary staff is because they don’t want to spend the money or they think they can do the work themselves. Then it gets to be too late. They’re so overwhelmed by their business; they don’t have time to hire someone to help. The lesson: If you liked the business model enough to buy it, use it! That is the way to maximize your earnings.