Fall 2015
Specialty Retail Trends in Franchising

Five Questions to Ask Before Buying a Franchise

A franchise is an attractive business proposition for many reasons: clear, well-defined business regulations, access to capital and financing, strong brand image and marketing plans and a proven track record of success. What’s more, shopping centers love them back—franchisees are reliable merchants and can round out a center’s merchandise mix effectively. So should a franchise be your next move in specialty retail? Scott Lehr, Senior Vice President, U.S. International Development and Conferences at the International Franchise Association, shares some questions to ask yourself before you take the plunge. As with any business decision, be advised to check with your financial or business advisor before cementing plans.

Are you willing to learn new skills and take direction?

Lehr says that this is probably one of the most important questions a franchisee needs to ask of him or herself. “While it is a known fact that franchisees share business insights with their franchisors and that feedback can be used to alter systems, for the most part you are operating a system that is time-tested and proven with tools and operations to run a successful business so it’s important to be able to follow directions,” Lehr says. Some people enjoy the camaraderie of joining a franchise family, with franchisees running similar business practices and having that support system to lean on can be really great, he adds. Yet a franchise is not for someone who wants to color too much outside the lines.

Do you need to experiment with your products and services? Do you play well on a team and are willing to share operational information with franchisors?

While some experimentation is encouraged with franchises, especially for practices that best suit your local market, it is usually recommended to go by the playbook and not stray too far from established best practices. Michael Seid, Managing Director of MSA Worldwide a domestic and international franchise advisory firm, points out that franchisors pay field visits to franchisees and franchisees should be transparent about their business practices to find success.

What are the reasons you are looking to invest in a franchise?

Most people who look to franchises as career advancement belong to middle management; they’ve hit the glass ceiling in the corporate world and are looking to a franchise unit as a way to improving lifestyle and financial goals, Lehr says. It helps to have a solid skill set of managerial skills and corporate experience before taking on a franchise. You should be able to motivate and manage sales staff and provide effective training to employees.

Do you have enough financial backing?

Having the financial wherewithal to get through the first bumpy couple of years is important, Lehr points out. The franchisor should help you determine the total investment you will need and all such finances should be fully disclosed in the Franchise Disclosure Document before you sign on the dotted line.

Follow-up queries

Other questions you need to ask include: what kind of business would you truly like to work in, what kind of income do you need and how much are you willing to work for it? How supportive is your family of your decision?

A critical look at these factors will set you on the path to figure out if a franchise is right for you.


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Poornima Apte

Poornima Apte is a Boston-area freelance writer and editor specializing in retail and the book publishing industry. Learn more at wordcumulus.wordpress.com.
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