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Established in 2001  •  $4.3+ Billion Raised  •  2,400+ Clients

Consider These Criteria before Buying a Franchise

We receive requests quite regularly from prospective clients who are interested in purchasing a franchise. Very often, these are corporate middle managers who, for one reason or another, no longer have an interest in climbing the ladder or participating in the corporate arena. Another category of people we hear from often are immigrants who wish to come to the United States and have determined that the fastest way to obtain a visa is through one of the business and investment programs that are available to immigrants through the U.S. Citizenship & Immigration Services.

Consider These Criteria before Buying a Franchise

We have looked at a lot of franchise opportunities over the years, and we have seen some really terrific opportunities. Of course, we’ve seen some stinkers as well. Based on our experience, we’ve identified some criteria you should consider to help you decide whether or not a franchise might be a good fit for your needs:

  • Success – Is the franchise successful? Has the franchisor sold a significant number of units so that you have the confidence that they are going to be around for a long time?
  • Credible – You should be convinced that the franchise and the people behind it are credible and capable of following through on their promises.
  • Differentiation – Are you convinced that the franchise is able to differentiate itself from other similar business opportunities? Is there something about it that is unique?
  • Teachability and learnability – Be certain that the franchisor has the ability and the responsibility to teach you the business. Equally important, make certain that you have the talent, skills, and mentality needed to learn the business.
  • Systemization – One of the most important aspects of any franchise is that the franchisor has developed a system that allows a large and diverse number of franchisees to successfully operate the business.
  • Affordability & Capital – Do you understand the total investment requirements to purchase and operate the franchise? Can you afford to make this investment at this time? Can the franchisor provide you with access to capital?
  • Profitability – You must be convinced that the franchise will be profitable so long as you establish the business and operate it according to the franchisor’s guidelines. Remember that an important rule for any entrepreneur is that if you are going to invest in and work for a new business, you are entitled to a wage in addition to a return on your investment. Do not settle for anything less.
  • Market Trends – You should determine that the franchise you wish to purchase is in an exciting and fast-growing business category, and not something that is tired and overdone. Some examples of trendy market opportunities include education, fitness, and activities for seniors.

After considering a franchise opportunity, if you feel really good about each of the benchmarks listed above, then it might be a good idea to move forward. If you are still not sure, there are plenty of good resources out there that can help in a number of ways. Some of those resources include:

Someone once said that at the beginning, every great business started with a great business plan. Writing a comprehensive business plan is an excellent way to determine whether or not your franchise meets the criteria listed above.

Related Services: Franchise Business Plan Consulting.

Jimmy Lewin

Jimmy's background includes over 40 years in international, commercial, and investment banking, and nearly a decade as the principal shareholder and CEO of a rapidly growing manufacturing and distribution business in California. Today, Jimmy spends his time advising and consulting with entrepreneurs on matters related to business planning, as well as capital markets and funding strategies. Jimmy works with clients throughout the world in industries that include financial services, real estate, manufacturing and hospitality. View details.

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