Here are 20 questions that will save you time and money. There are great franchise options out there, but you must do your due diligence.
The acquisition market has been hot lately. The value of U.S. mergers and acquisitions in 2021 across 7,896 transactions reached $2.6 trillion, 30 percent above the previous record set in 2015. In the first half of 2022, the market pulled back, dropping 29 percent year-over-year, but this is still strong by historic standards.
Private equity (PE) firms are watching your franchise business — right now. If you want to eventually exit via a private equity buy-out, you must build a valuable reputation.
Most of the challenges encountered by young franchise systems can be avoided with planning and following best practices. Common routes to trouble include the failure to ensure strong unit level economics, charging too much or too little in franchise royalties and fees, or launching into franchising undercapitalized. Early systems can also end up recruiting the wrong franchisees and end up tangled in litigation.
First determine if you can follow a system, then find the right system for you.
Preparation and mindset make you a better franchise candidate as well as entrepreneur.
Why does the same franchise opportunity look simultaneously compelling and questionable, depending on who you ask?
Prospective franchisees have many things to consider as they go through due diligence. The market environment is one major factor. During the pandemic, some candidates put their decisions on hold. Many came roaring back as the job market shifted and people started looking for entrepreneurial opportunities.
Do your homework on the franchise that interests you. Then move forward with confidence.
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PRIVATE EQUITY’S IMPACT ON FRANCHISING
EMERGING BRANDS
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BUILDING SMART
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