That's why many would-be businesspeople will gravitate toward pre-digested lists, like the lists of best and worst franchises that Forbes publishes. The newest one came out last week.
Take a gander, learn how things are going, and cut down your research, right? Not necessarily. With the best of intentions and lots of information-;Forbes worked with an industry research firm, FRANdata-;you could still find that someone else's suggestions were not going to help.
To get some insight into what steps you might take, I got hold of Jeff Lefler, CEO of the site FranchiseGrade.com and spoke with him about the Forbes list. Here are some suggestions for how to approach another person's ideas of the best and worst in the franchise industry.
1. It's about you, not them
"There's never a best of across the board for everybody," Lefler said. "It's always about the best for you in your city. Just because Planet Fitness is on that list doesn't mean you can afford it or you want to operate it. It might be saturated in your area."
Some franchise operations may be completely unavailable for reasons that don't necessarily appear on the ratings charts. "Some of those brands in that list are looking for multi-unit developers or have very limited territory for an outsider," Lefler said. "Some of their growth is internal development," which means experienced operators sign agreements for multiple units, significantly reducing the number of individuals who made an operation work.
2. Be realistic about investment
My immediate reaction on looking at the Forbes list was that these were franchisors that wanted people with a fair amount of wealth. On the best list, midpoint initial investment ran from between $47,492 on the low end for Soccer Shots and $16,363,325 for a TownePlace Suites by Marriott.
But these aren't the only options. "There are franchises that are home-based that are $30,000 investments," Lefler said. "Some of these franchisees are grossing six-figures a year." Which is another point: Remember that unit sales are generally before costs and taxes.
3. You can test the waters
Jumping into a big investment and a full-time (or more) franchise operation can be daunting. But there are those home-based franchises that can give you an entrée into your own business without having to immediate drop your job.
"A lot of people that really want to open up their own business is they're scared to quit their jobs," Lefler said. "Some franchises that are lower cost provide that part-time opportunity." Build a business on the side and see what you can make of it. You keep the stability of a regular income and benefits from your job.
4. Find a fit
When you look through a list of potential franchises, it can be almost like assuming you'd be fine in any type of business. That probably isn't the case.
"Somebody can be a high-priced business consultant and do well in it but put them in a restaurant and they're probably going to fail," Lefler said. 'There's a level of compatibility." If you've never even changed the oil in a car, a franchised automotive shop is not your best choice. Find something that fits your talents, your knowledge, and your experience.
5. Apparently bad stats may not be
When someone generates a list, they need criteria and assumptions for what is bad. One of the correlations Forbes apparently made is that the five-year growth rate was directly related to desirability of the franchise. If people are apparently bailing out, maybe there's a reason.
"Some brands that are suffering or shrinking still have very popular areas," said Lefler. "A lot of times negative growth is a sign of a negative problem, but brands sometimes come down [in size], finding a balance." A brand with a good reputation in your market may be viable even if shrinking across the country while a hot newer brand may have little local appeal.
6. Beware of being someone's experiment
You'd think that if you were granted a franchise operation, it meant that the central organization were pulling for you to succeed. That might be the case, or there could be a twist.
"A lot of those first-time franchisees have a consumer emotional mindset," Lefler said. "It can lead to predatory practices. I've had a franchisor literally tell us we have franchisees open new markets that we don't know will be sustainable and if they are for five years, we'll cancel the contract and take over the store." It's a nasty approach and one you want to avoid.
Before jumping into a franchise opportunity, check multiple sources of information, and talk to people involved-;both those offered by the franchisor and others who haven't been. Be sure that you've got a good personal shot at success that you can build on.