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Choose the best franchises

Criteria for selecting the best franchise

What aspects must be evaluated when selecting a franchise

When trying to decide upon the best franchise opportunity for creating your business, the first thing you must do is select a business model. In fact, this is where the key to success is found. You must focus on business models that you find appealing, which you can identify with and carry out with passion.

The first thing you must analyze is whether or not you are really prepared to be an entrepreneur, because being a franchisee also means being an entrepreneur. You will need to put in a significant amount of effort, both personally and economically. You must be careful not to be taken in by “pie in the sky” claims that an activity will present very high profitability from the first month of work, or that the effort you must dedicate is very limited. Any business requires time to mature as well as the full dedication of its owner, and a franchise is no exception.

Next you must study the specific characteristics of the franchising system, analyzing not only the advantages and rights, but also the obligations the system creates.
 

Working under the umbrella of a franchise may not be the best decision for every entrepreneur, since in addition to the basic characteristics that any entrepreneur must have, such as leadership, financial skills, business discipline, professional experience, perseverance, self-motivation, willingness to sacrifice, etc., a franchisee must have three additional qualities: desire to be part of a network, loyalty, and the ability to work as a group.

Once this self-assessment has been performed in a satisfactory manner, the business model must then be selected. In fact, this is where the key to success can be found. You must focus on business models that you find appealing, which you can identify with and carry out with passion, while always ensuring that the industry involved is in a growth phase and that there is sufficient demand in the area where the franchise would be located.

Next you must study the various chains that are operating in the market, taking advantage of a law in Spain that will allow you to request a set of information that will be fundamental for making decisions (Royal Decree 201/2010 on Retail Commerce). Among others aspects: Identification of the franchisor, type of business activity, and characteristics of the franchise (including those related to its operation, structure, and extension of the network), as well as the essential characteristics of the franchising agreement.

Potential revenues based on the franchisor's experience and the units already opened, in order to avoid problems with medium-term liquidity. This financial planning will need to be fine-tuned once the location has been selected (in cases where necessary). Creation of a financing plan will be of critical importance, since this plays a very important role in relation to both investment (remodeling of the location) and ongoing expenses (monthly rent).

Finally, it is a good idea to contact some actual franchisees from the network under study, since they will be able to give you first-hand information. Reviewing all of this information with the assistance of various other actors involved in the system (associations, consultants, attorneys, etc.) will prove to be very useful when the time comes to make your final decision.

Criteria for selecting the best franchise