Top Factors for Evaluating a Franchise

On this article, you will dive right into the process of evaluating a franchise.

What is the typical process of evaluating a franchise?

Steve: Hi, everybody, this is Steve Maggi. Welcome to “Building Your Bridge,” where we talk to experts and professionals that work with international investors and international entrepreneurs that want to come to the U.S. And it’s my honor to have, as my guest, Patrick Findaro, one of the founders of Visa Franchise. Thanks for coming on, Patrick. We’ve known each other for a while, so it’s nice to finally do this.

Patrick: Exactly. We’ve been hanging out for some time now. Thanks a lot, Steve.

About the Visa Fanchise process

Steve: Absolutely. What does Visa Fanchise’s process look like when evaluating a franchise?

Patrick: Sure, so, just to give a perspective, we’ve reviewed well over 2,000 franchises. Many of them approach us because if you search like E-2 Visa Franchise or anything with, you know, visa and franchise, we pop up on the top of Google, and we have a strong network of corporate attorneys, franchise attorneys, immigration attorneys that we work with that will oftentimes refer franchises our way.

So what my brother, Jack will do is look at the past three years’ financials, so the balance sheet, financial, the income statement of the franchisor, learning how they make money, how profitable they are. We don’t wanna see a franchise like Burgerim, who made $10 million plus in selling the franchises, and there’s very few actually open, and they’re not making money on the royalties. So, we’re pretty good at identifying red flags. We look at any pending litigation, closed litigation. We look at the profiles of the executives.

We review the customer reviews on Google, Yelp, across many of the different physical locations of that franchise.

Steve: Okay.

Talking To Franchisees

Patrick: And then we talk to franchisees to see how satisfied they are with their franchisor, how they’re making money, how long it took them to recoup their capital, how long it took to break even? So we ask, I mean, at least 40, 50 questions to the franchisor or franchisees. And we do require a lot of information on the business before we would feel comfortable presenting it to a Visa Franchise client.

So those are some of the things we have in mind when we are evaluating a franchise. And, then, specifically for our clients, we see if there’s a member from their team that maybe speaks Spanish, or French, or Russian, that can serve our clients, that maybe they speak intermediate or advanced English, but they would prefer to be working and receiving support from someone in their native language, so…

Steve: Always, always best because there’s no misunderstandings, everything’s clear, and it’s much more intricate than a conversation about what you had for lunch. It’s intricate and detailed business talk.

Patrick: I think with legal items and, then, finance, people still wanna speak in their native language.

Steve: Very true.

Conclusion

Patrick: I mean, I have some clients that their English is much better than my Spanish, and they just prefer to speak Spanish with me, and that’s fine. But, if you wanna have that kind of intimacy in the working relationship with the franchisor, know that it’s gonna limit the options and you might have to focus…for example, if you’re from Latin America or Spain, and open up the business in Florida, Texas, or California, where there is a large Latin community, and it’s growing a lot, it’s great, it’s growing, and there’s a lot of business opportunities, but all of a sudden, the list of prospective businesses can drop from 100 to, say, 10.

So we look at all of those factors to determine what initially passes our pre-vetting. And then also fitting it in terms of what the client wants.