Franchise Comparison
Franchise comparison is an important process. Do not make quick decisions. Take nothing for granted. Franchises can appear similar. It takes time and effort to make an informed decision. My suggestions are not all-inclusive and are only intended to compare franchises offering similar products or services.
Start with a quantitative analysis. Request an initial franchise packet and Disclosure Document from each Franchisor. Carefully review this information to compare costs. Certain items and expenses may be provided as part of the franchise, while others will be an additional expense to you.
Create a comparison spreadsheet. Along the left side list: the franchise fee; the monthly royalty percentage; national advertising percentage; air-fare to and from training; motel, meals and rental car during training; required tools and equipment; letterhead and business cards; marketing and promotional materials; etc. (Continue down the left side with every associated cost.)
Across the top of your spreadsheet, make a column for each franchise. Moving down each column list the cost of the items and whether it is included or an additional charge to you. Once you have completed this exercise, you will have a realistic idea of the costs associated with purchasing each respective franchise. Do not base your decision to purchase on a quantitative comparison alone. You must also do a qualitative evaluation.
A second spreadsheet can be helpful with a Qualitative comparison as well. Along the left side list:
- How long it took each company to return your phone call or e-mail.
- How long it took each to send you the initial franchise packet and Disclosure Document.
- How professional and complete was the information they sent you.
- Did they make a follow up call?
- During that call did you feel pressured?
- How long have they been in business?
- How many franchisees do they have?
- Are they financially sound (audited financial statements should be attached to the Disclosure Document)?
- Are most existing franchisees satisfied (it is impossible to please everyone)?
- How long and complete is their training?
- Do they have established accounts from which you can benefit; did they invite you to visit them?
- Is the franchisor selective or can anyone purchase the franchise?
- What is the franchise term and renewal provisions?
- Do they profit from supplies and materials that you must purchase, etc.?
(Continue the list until you have reasonably answered all your questions.)
Across the top of this spreadsheet list the various companies as before. Moving down the respective columns answer “yes, no, good, fair, or poor, etc.”, as the case may be. You are hopefully ready to make a decision. If not, there are professional franchise consultants. Friends, neighbors or relatives that have never owned or operated a business, are not the best source for advice and competitors are not likely to help you. However, many successful business owners are happy to consult with you in confidence and for free. Good luck choosing and great success with your new business.
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Franchise comparison is an important process. Do not make quick decisions. Take nothing for granted. Franchises can appear similar. It takes time and effort to make an informed decision. My suggestions are not all-inclusive and are only intended to compare franchises offering similar products or services.
Start with a quantitative analysis. Request an initial franchise packet and Disclosure Document from each Franchisor. Carefully review this information to compare costs. Certain items and expenses may be provided as part of the franchise, while others will be an additional expense to you.
Create a comparison spreadsheet. Along the left side list: the franchise fee; the monthly royalty percentage; national advertising percentage; air-fare to and from training; motel, meals and rental car during training; required tools and equipment; letterhead and business cards; marketing and promotional materials; etc. (Continue down the left side with every associated cost.)
Across the top of your spreadsheet, make a column for each franchise. Moving down each column list the cost of the items and whether it is included or an additional charge to you. Once you have completed this exercise, you will have a realistic idea of the costs associated with purchasing each respective franchise. Do not base your decision to purchase on a quantitative comparison alone. You must also do a qualitative evaluation.
A second spreadsheet can be helpful with a Qualitative comparison as well. Along the left side list:
- How long it took each company to return your phone call or e-mail.
- How long it took each to send you the initial franchise packet and Disclosure Document.
- How professional and complete was the information they sent you.
- Did they make a follow up call?
- During that call did you feel pressured?
- How long have they been in business?
- How many franchisees do they have?
- Are they financially sound (audited financial statements should be attached to the Disclosure Document)?
- Are most existing franchisees satisfied (it is impossible to please everyone)?
- How long and complete is their training?
- Do they have established accounts from which you can benefit; did they invite you to visit them?
- Is the franchisor selective or can anyone purchase the franchise?
- What is the franchise term and renewal provisions?
- Do they profit from supplies and materials that you must purchase, etc.?
(Continue the list until you have reasonably answered all your questions.)
Across the top of this spreadsheet list the various companies as before. Moving down the respective columns answer “yes, no, good, fair, or poor, etc.”, as the case may be. You are hopefully ready to make a decision. If not, there are professional franchise consultants. Friends, neighbors or relatives that have never owned or operated a business, are not the best source for advice and competitors are not likely to help you. However, many successful business owners are happy to consult with you in confidence and for free. Good luck choosing and great success with your new business.
