What to Consider When Choosing a Franchise Opportunity

When searching for the right franchise opportunities, most people will start with a pre-conceived notion of what they want to do. As an example, if someone really loves pizza, they may start their search by investigating several different pizza franchise opportunities.  When searching for a franchise opportunity it is imperative that you take the time to analyze four key items that will increase your chances of success.


Having experience in the same industry as the franchise opportunity that you choose will give you a great advantage. It provides you with insight that allows you to understand the products or services, the customer base, and greatly reduces your learning curve.

When looking at a specific brand for a franchise business opportunity, you should also consider your experience managing employees. If you have never managed people before, you may not want to jump into a franchise opportunity that requires a large staff. The time you will spend to learn the task of managing your employees will greatly reduce the amount of time you can give to the business operation.

Lastly, you should also consider your level of experience operating a business. If this is your first time, you should consider finding a franchise opportunity that is simplistic. This greatly reduces the number of things you will need to learn and increases your chance of success.


It is important for you to consider the amount of time you will have to spend with your new franchise business. The best chance for success is to make this your full-time job. This will allow you to learn the business quicker, identify and resolve issues, ensure a high quality of customer service, and oversee the financial aspects of the business. If you are planning on continuing with your current career and having someone else run your business, you can be assured that problems will arise in the future. Since you have invested a substantial amount of money in your new franchise opportunity, you are the only one with something to lose.  It is important that you commit your time and protect your investment.

Your Financial Ability

Before you begin your search for the right franchise opportunity, it is important that you examine your financial situation. When researching the cost to start a franchise, the franchise company will provide you with a wide range based on the lowest and highest cost for openings in the previous year. The better criteria for understanding how much money you will need is the “liquid capital” requirement. This refers to the minimum amount of money you will need to qualify for a loan. Liquid essentially means any assets that you can exchange for capital. These liquid assets could be property, automobiles, stocks, jewelry, or anything else of value. Once you assess your liquid capital available, you can then start narrowing down your list of franchise opportunities by what you can afford.

Once you have considered your experience, time commitment, and financial ability, you now have some criteria in place for making a short list of franchise opportunities that may be a good match.

Financial Model of the Franchise Opportunity

Once you have a list of franchise opportunities that interest you, the next step is to dive into the financial aspect of the business. If you are considering purchasing an existing franchise, the owner should be able to provide you with at least three years of financial statements to review. If you are interested in a franchise business opportunity that entails starting a new business, there are a couple of ways to get financials to review. In the Franchise Disclosure Document (FDD) there is an item 19 that provides financial information for the previous year. This information is not required to be in the FDD, so some franchise concepts may not have it available. If the financial information is available, it could be all locations or a subset such as only company-owned locations. If there is no information included in item 19, you should contact existing franchisees which will be listed in the back of the FDD.  Hopefully, you can find at least one owner who would be willing to share their financial information.

Now that you have some financial information to review, it is highly recommended that you work with an accountant to better understand the strength of the financial model. This will not be an expensive service, and an accountant can help you determine the potential for earnings versus the cost to start your own business. Too many people decide to buy a franchise business based on emotions. To protect your investment and ensure you meet your financial goals, it is imperative that you consult an accountant! Please visit our “Professional Resources” page to find an accountant near you.

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