Editorial

How the Internet has Impacted Researching a Franchised Business for Purchase

Not long ago, before everyone had access to that amazing and magical phenomenon called the internet, people researching a Franchise opportunity had to do it the old-fashioned way: picking up the phone and then waiting for information to arrive via mail. Today, the likeliest way to find information when an idea strikes is to research it on the internet. Poof! Everything you could possibly want to know about a franchisor suddenly appears before your eyes. This has created some major changes in investigating franchises. Or has it?

Most of us only recognize Franchising because as we drive down Main Street, we recognize certain brands, like McDonald’s, Subway and Quick Oil Change. As the industry grows/matures, and the same Main Street looks homogenized, we have started to recognize more brands and we have found a certain comfort in dealing with local companies that have a national connection.

Enter the internet – now your ability to learn about franchised businesses is limited only by the amount of time you want to spend reading about them. There are a multitude of franchised businesses, advertised by a multitude of Web sites. Google “franchise” and you’ll get over a hundred million options. Be more specific like “print ship franchise” and you get one and a half million links to opportunities. It’s a veritable feast of information – a “business owner wannabe’s” dream, or depending on viewpoint, nightmare.

Getting the information you want is easy. Click on the links to Franchise Directories and you will see a list of companies and their investment and other information for comparison. Then go to the Web site of the companies that look interesting and learn even more.

Detailed Research
Pre internet, a prospective franchisee would need to request information from the franchisor. The information would include the UFOC (Uniform franchise Offering Circular), a brochure listing the benefits of being a franchisee, and sometimes a short video. Getting the information wasn’t hard but there was no immediate reward for your effort – you’d have to wait for the postman.

You’ll still get this information when you contact a specific franchisor but you can learn much about a company from the internet before you even take that step, such as:

How many current locations do they have? Many franchisors’ sites will list their current locations and some will have links to their franchisees’ personal sites.
What kind of marketing do they use? The internet is directed at consumers as well as it is at a potential franchisee. Therefore you can get a feel for the type and amount of marketing a company does. Some sites even have links to TV and print ads right on their Web sites.
Who are their competitors? You can find information not only on the company you are interested in but also similar businesses. Compare what they do alike and what they do differently to get a better overall picture of the specific industry.
What’s new in the company? Read the company’s press releases to learn what they have changed or what they are doing differently. Most companies will put out a new release when key personnel changes or when they have added to or altered the service or product.
How does the industry rank a franchisor? You can further refine your research by learning how a company is ranked by franchise-specific publications, such as the Entrepreneur magazine’s Franchise 500, which lists the top franchise companies each year and franchise business Review, which rates Franchises by franchisee satisfaction.
Who are the people running a franchise company? Google the names of the top personnel to learn what companies they came from and what other positions they have held.
What’s the bad news? You need to know the negative as well as the positive aspects of any business you are thinking of buying. Many disgruntled franchisees have started their own blog pages to detail what they didn’t like about a franchise company. One person’s negative experience shouldn’t dissuade you from doing further research on a company but keep the complaint in mind and make sure you get your questions answered to your satisfaction.

Research that may have taken months now takes minutes. All of these points are very important to finding the right opportunity, however they are not the sole factors needed in making a good decision.

Everything that changes remains the same
Getting the publishable facts about a business is only a part of a candidate’s research process. A potential franchisee should go through a number of steps after researching a company and before making the final decision to buy a franchised business. These generally involve such items as requesting and reading the UFOC document, making several calls to the operations people in the Franchise Company to discuss the business in detail, calling a number of existing franchisees in the system to see how they feel about all aspects of the business, visiting one or more locations to learn about the business in person, and finally making a trip to see the franchise company personnel at their headquarters.

But wait; there’s still more
An equally large share of your decision will be based on your emotional, right-brained “gut feeling” about the franchise as with the logical, left-brained focused characteristics of the business. The personality and culture of a franchise can impact your success and happiness as much as the ROI and hours worked.

Some of the questions you will ask yourself:

Am I willing to pound the pavement to find customers who will value my service?
Am I willing to accept the role and responsibility of hiring, training, managing and firing employees?
Is my family in agreement and completely aware of the commitment this will require for the first couple of years?
Do I have enough cash reserves to get through any rough spots?

Additionally, great franchisors don’t simply award a franchise to just anyone who asks. There is a financial requirement to be met, a set of skill and personality traits to be matched to the company, and finally the franchisor must be convinced that the franchisee has what it takes to make the business a success. The last thing a franchise company wants to have show up in their UFOC document is a list of failed franchisees.

The Internet has not only helped the potential franchisee find a greater number of franchised businesses to choose from, it also gives the franchisors a significantly greater number of highly qualified and motivated potential franchisees. The end result is that both – the potential franchisee and the franchisor – have more choices.

If you are interested in becoming the owner of a franchised business, the internet will certainly give you many ways to find out more about the company, its competitors and the franchise industry in general – all without leaving home. But even getting all of the facts about a business won’t prevent you from going through all of the emotions, excitement and stress of making the actual decision. With or without the internet, that process remains unchanged.