Before You Buy A Franchise Get The Answers To These Three Questions

By John P. Hayes, Ph.D.

"Not long after I lost my job, a friend told me about this franchise. I looked into it and bought one."

It may surprise you, but that's how -- and why -- many people buy franchises!

Here are some other reasons:

Crazy Excuses

"I decided I wanted to work for myself, not someone else."

"A franchise broker showed me a half dozen concepts and I liked this one best."

"It's the 'hottest' business to be in right now and I wanted one."

"My father told me it was a good business and he put up the money."

And here's the point

I could go on . . . but what's the point?

Those are all wrong reasons for buying a franchise. In fact, those aren't reasons; they are crazy excuses. And they almost always lead to grave disappointments.

When people buy franchises for the wrong reasons they usually live to regret it (though sometimes they pray not to). Often times, it wasn't the "hottest" business, and even if it was, the franchisee wasn't cut out to own the business, with or without daddy's money! Often times, these businesses fail and the franchisees lose their investments. Google will lead you to countless ugly stories about franchise failures.

3 questions you must answer

If you want to avoid becoming a sad statistic in franchise history, there are three questions you must positively answer even before you investigate a specific franchise concept. In fact, answering these three questions can keep you from spending time and resources looking at the wrong franchises, and they will ultimately help you invest in the right franchise, providing that buying a franchise is the best thing for you. (It's not for everyone).

Frankly, it amazes me that so many people buy franchises without knowing these three points of information. But apparently, no one told them this information is important. (Or, maybe they're okay with using crazy excuses!)

So here we go:

Know the success profile

1. Do you know the profile of a successful franchisee?

Do you know the values, skills and behaviors of successful franchisees who own this particular franchise? They're not necessarily the same as the traits of a good employee, for example, or a good vice president or CEO. Just because you excelled in your Fortune 500 job, or you were Teacher of the Year, or a real estate tycoon, it doesn't mean you've got what it takes to become a successful franchisee.

Valuable advice: Even before you think about writing a check to pay a franchise fee, you need to be absolutely certain you can describe the profile of a successful franchisee in that specific franchise network.

Caution: Many franchisors cannot tell you the profile of successful franchisees in their network! Insist that they find out before you invest.

Be sure you got it!

2. Do you possess the profile of a successful franchisee?

Do you have what it takes personality wise to succeed in this particular business?

Do you have the values, skills and behaviors of successful franchisees?

Caution: Most people do not!

Franchisors should use personality profiles. But most do not. Therefore, even if you think you’ve got the profile of a successful franchisee, you can’t know for certain unless the franchisor can demonstrate that profile to you. Insist on it!

Match it to the business

3.  Does your profile match the profile of the successful franchisees in the business you intend to buy?

This question is the most important of all. Let's say you've identified the profile of a successful franchisee and you know you've got the same profile.

But for which franchise?

There are at least 2,000 -- maybe 3,000 -- franchise companies in North America. They're all different. They don't all require different profiles, but many do. For example, a successful franchisee in the hair salon industry, just to pick an industry, may fail in the hospitality industry, or the lawn care industry, just to pick two more. He may fail because he doesn't have what it takes to succeed in that different industry. (Personality is by no means the only requisite to success -- there are other considerations, including access to capital, location, and common sense, to mention a few).

Another ugly statistic

There are more than 75 different industries that use franchising as their method of distribution. So matching a success profile to an industry, and ultimately to one franchise company, is critical. Miss this and you'll likely become one of those ugly franchise statistics.

Critical question: If you can't define your own success profile and know that it matches the success profile for franchisees in a specific franchise company, why would you invest in that franchise?

I hope you said you wouldn't!

. . . John P. Hayes writes several franchise-related blogs including HowToBuyAFranchise.com. He is a 30-year franchise veteran and has been a franchisor, franchisee and an industry advisor.