5 Proven Tips to Choose the Right Franchise
Sep 10, 2024
Cesar Coronado has been in franchising for approximately five years, and he and his business partner successfully operate 7 Tropical Smoothie Cafes in Chicago. They entered the franchising industry with a growth and long-term mentality, signing an initial agreement to open seven stores, which they have fulfilled under the timeline they had set out.
I invited Cesar, who is also a client of the American Franchise Academy, to participate in “Franchisee Wisdom”, the interview series of our Franchise Success Formulas Podcast. This playlist is filled with advice from amazing, successful, top-performing Multi-Unit Franchisees who share their franchise journey and all their accumulated knowledge.
We chatted about his journey into franchising, his challenges in running his franchise business, and how he has overcome them. He also shared valuable insights and advice for aspiring and current franchisees. His journey showcases the rewards and challenges of franchising, and his dedication to his business and community is inspiring.
In this blog post, I bring you the steps Cesar and his business partner took to methodically choose which franchise to buy, based not only on the financial aspects but also on other critical factors they considered to make this life-changing decision.
If you are in the process of buying a franchise, whether to enter the franchise industry or grow your brand portfolio, I’m sure his insights and experience will help you invest in your ideal franchise.
But first, please subscribe to our YouTube channel and Podcast, and follow us on all social platforms!
Step 1: Define the Right Path
Some people aspire to have a successful corporate career with a monthly salary and a 9 to 5 schedule. Others prefer to venture into business ownership, whether independent or franchising. And within the franchising industry, you can choose to operate a single unit or go multi-unit to obtain true time and financial freedom.
Like most entrepreneurs, Cesar decided to start his own business during his formative years of college, although he had already shown an entrepreneurial spirit when he was younger. He was also inspired by his mom, another “natural-born entrepreneur” who encouraged him and his siblings to constantly push the envelope and improve themselves academically and personally.
Thanks to her guidance, he was the first person in his immediate family to attend university, graduating from International Business and Finance. During those years, he became captivated by the business world, committing himself to mastering the fundamental business principles and the high-level knowledge he needed to succeed
Like many students, he also had his first job experiences back then. He worked at various full-service restaurants, so he was pretty familiar with the restaurant’s operations by the time he earned his degree. He also had the opportunity to work in asset management, assisting in managing an international debt portfolio.
When he graduated, it was time to make a decision: was he going to go corporate or pursue his natural calling of entrepreneurship? He wanted financial freedom and knew there were many different paths to obtain that.
“I was already on the Finance path. But I wanted to explore what were the other lanes on the so-called ‘highway to the destination of financial freedom’”, he recalls. Methodical as he is, he analyzed the pros and cons of his alternatives. But he wasn’t alone in this task.
Step 2: Find the Correct Partner
Going into business with a partner is a good decision if you want someone to bounce ideas and share the risk with. However, selecting the correct partner is critical to having a successful business and a healthy long-term relationship.
“I was fortunate to think through my options with a friend, and we discussed what going into business would look like. His skills complemented mine, and we realized that combining our backgrounds (mine in Operations, his specialty in Human Resources, and our overlap in Finance) would allow us to build something special.”
Cesar and his friend not only had the same business interests and complemented each other's abilities, knowledge, and expertise. They both shared core values, which is very important in a business partnership, especially supporting one another during hard times.
“It certainly helps. And when things get tough, like they undoubtedly will, having someone who thinks similarly helps a lot. We're believers. We believe in people, hard work, and the gift of vision. So we saw the potential, joined forces, and ventured into it”.
Step 3: Select the Ideal Brand
The duo could have started a business from scratch, but they recognized that the opportunity cost was higher than they were willing to accept, plus there would be a lot of trial and error. Franchising seemed to be more suitable for them. “If we could find a concept that aligned with who we were and had all the boxes checked for us, it would be very interesting and compelling”.
Once Cesar and his friend (and current business partner) decided to get into franchising, they faced another problem: identifying the right franchise brand that coincided with their skills and values. Again, they approached the search methodically.
“It’s second nature to us. We're both finance guys, so we gathered and filtered data. We vetted literally over 500 franchise concepts”, he confessed.
The analysis was no joke to them. They purchased lists left and right, threw them in an Excel sheet, created pivot tables, and graded them on critical metrics like unit economics, seasonality, and operational complexity.
Don’t miss: 6 Key Financial Insights for Multi-Unit Franchisees
They also evaluated the franchise investment under three key levers: Human capital, Financial capital, and Technology. He advises aspiring franchisees to look at these components carefully:
“Think about Human Capital in franchising: you can build the stores, but if you don't have people staffing those stores, there's no way to scale. For Financial Capital, think of real estate. How do you scale in real estate? You need more capital to be able to purchase and expand your portfolio. And then, for Technology, think of applications and code.”
“Understanding the balance of these levers helped us identify the right business for us. And that's when we found Tropical Smoothie Cafe”, he shared.
Step 4: Consider your Preferences
Tropical Smoothie had many financial and operational requirements Cesar and his friend were searching for. But they also fell in love with the concept and its flavors.
“We had the Chipotle Chicken Flatbread, the Santa Fe quesadilla, and the Mango Magic Smoothie. Immediately, the product aligned with who we are as people because we appreciate healthier options that don’t compromise flavor. Seeing the execution speed and the systems in the back of the house was very compelling for us as well."
This step is also vital. Selecting which franchise to buy should not be only a financial decision. If you don’t like the concept, you should not consider investing in it. You have to be passionate about the product or service you’ll sell, the employees you’ll hire, and the customers you’ll serve.
In case you missed it: Strategies for Choosing a New Brand (Video)
Step 5: Meet the Team
Meeting the team behind the brand solidified the decision for Cesar and his partner.
“Seeing the energy, the vision, and the mission they had was great. The ‘how’ was there. The ‘why’ was there. And that was very, very compelling to us because we weren't throwing darts at the board. It was like, this is what we want to do, and this is how we will do it.”
These two last steps are crucial because you'll be around that particular brand for a long time. The franchisor-franchisee relationship is almost like a marriage. Loving and being passionate about the product or the service you're going to sell is crucial to get you through the bad times.
Cesar and his business partner definitely brought the selection process and analysis to a whole new level. Perhaps you don’t have an economic background or business experience, but finding the right franchise for you is not fancy science; it is basically a checklist of the things you expect, desire, and are essential to you as an investor.
From there, the ultimate brand will rise to the top. For them, it was Tropical Smoothie. But for you, it may be a personal service brand, a spa, a car care service, or a casual dining franchise. The answer will be different for every person or partnership.
However, the process they followed was the right one because they could review all the things that were important to them and their investment, not just in the immediate future but beyond. Ultimately, this careful step-by-step helped them secure their investment and be successful in their everyday operation and growth.
If you want to run a successful franchisee, remember that the American Franchise Academy is your ally! We provide franchise business leaders with the knowledge, tools, and resources they need to be successful.
We do that with our three elite training programs: one for Franchisees, another one for District Managers, and a third one for Unit Managers or Single-Unit Franchisees. Reach out to us to discover how we can help you:
WATCH THIS VIDEO INTERVIEW on YOUTUBE HERE.
