5 Key Questions to Ask Yourself Before Investing in a Franchise

As a corporate executive or investor looking to diversify your portfolio, build generational wealth, start a family business, or make a career change, franchising offers a world of opportunity. 

With 3,000+ franchise concepts to choose from, there's a franchise model to fit nearly any goal or need. 

But with so many options, how do you find your ideal match? While financial due diligence is critical, there's another factor that's just as important, if not more so: the franchisor relationship.

Franchisors recognize the significance of relational fit, which is why they carefully screen candidates. The culture and dynamics of each franchise are as unique as the business itself. Choosing a franchisor that aligns with your relational needs and style can make all the difference. You'll feel more confident, less stressed, and better positioned to seize opportunities like prime territories or preferred vendor status. 

On the other hand, a poor cultural match can undermine your success. It can erode your confidence, compound your stress, and impede your growth. You may end up stuck in a miserable arrangement or forced to abandon your investment prematurely.

So how do you discern the type of franchisor relationship you want? Ask yourself these key questions:

Question 1: What level of closeness do I prefer? 

Some franchisees thrive on frequent check-ins and progress reports. Others prefer a hands-off approach. Smaller, regional franchisors often facilitate a tighter connection with leadership, while large national brands may feel more impersonal. Determine where you fall on this spectrum.

Question 2: How much support and guidance do I need?

If you're newer to business ownership or leadership, you may appreciate more hand holding - personal support reps, detailed ops manuals, robust software. Seasoned execs often prefer charting their own course, favoring flexible systems, freedom to choose vendors and software, and not paying for unutilized marketing or support. Know your support sweet spot.

Question 3: How important are peer relationships to me? 

For many franchisees, the owner network is the most vital aspect of the franchisor relationship. If that resonates, talk to multiple owners when vetting a brand. Are they competitors or collaborators? How readily do they mentor and support each other? Are there opportunities to connect and swap stories? Assess the network dynamics and compare to what you need or would like to have in a franchise.

Question 4: What pace and pressure level suits me?

Fast growth and ambitious targets energize some owners. Others prefer a steadier, more relaxed trajectory. If you're the former, a rapidly expanding young brand or results-driven culture with incentives for top performers could be ideal. If you lean laid-back, an established brand focused on sustainable growth, allowing single-unit ownership, or featuring high margins may fit better.

Question 5: Does diversity matter to me?

You needn't be in an underrepresented group to value diversity. Studies show diverse organizations enjoy higher profitability and outperform peers. And if you are a woman, person of color, military veteran, etc., a diverse franchise may feel more welcoming and offer tailored support and financing. Evaluate diversity at all levels - leadership, employees, franchisees, customers. Examine marketing, supplier programs, and franchisee sentiments.

The responses to these questions will help paint a picture of your optimal franchisor relationship. 

Bottom line: Franchise success is about alignment. 

So as you embark on your franchise journey, by all means dig into the financials, market demand, business model, and logistics. But don't neglect the relational dynamics. Because when it comes to franchising, your success isn't just about the numbers - it's about the partnership!

Ready To Explore Franchising? Let’s Talk!

Mack and Sharon Strange are on a mission as Franchise Consultants to help others go from “Start” to “Success” when it comes to franchise ownership.

If you’re curious about exploring franchising as a career pivot, investment vehicle or lucrative side hustle, let’s talk!

You can book a free, no obligation call with Mack here and/or a free call with Sharon here.

As Franchise Consultants, there’s no fee for our services.

Rather, our role is to serve as a trusted guide and educational resource, and we’re compensated by franchisors only if and when you decide to move forward with (and are approved for) franchise ownership.

Lastly, you can learn more about our story and how YOU can follow in our footsteps via the Franchise Together Podcast.

We look forward to connecting with you soon!