So, you want to own a franchise...

Before you buy your own franchise, there are two critical tests you have to pass:

1. Personal Inventory: Are You the Ideal Franchisee?
The most important test you must pass is a self-examination of your characteristics and desires, and whether or not they are compatible with franchising. According to Mary Tomzack in her book, Tips & Traps When Buying a Franchise, the ideal franchisee represents the compromise between an "employee" and an "entrepreneur."

While the entrepreneur possesses visionary leadership and builds companies from the ground up, franchisees follow the established business model created by another individual. Successful entrepreneurs are far more rare, and start-up businesses suffer a substantially higher rate of failure than franchises.

Profitable franchisees typically possess the following:
- Sales orientation
- High energy level
- Persistence and drive
- Strong self-image and confidence
- Willingness to follow established procedures
- A degree of risk aversion

Do you possess these qualities? Take the Personal Inventory Questionnaire to find out. This questionnaire contains 15 quick questions taken from Tomzack's book. It is designed as a rough measurement of your fit with franchising. Remember, this is not a test that you should feel bad about failing. In fact, the point of a personal inventory is to avoid making a very expensive mistake!

2. Franchisor Screening Process: Are We a Good Fit?
A franchisor's typical screening test is comprised of both qualitative and quantitative factors, covering the applicant's financial resources, experience and personality traits.

- Financial resources: assets, liabilities, net worth, sources of income
- Experience: educational history, past employment, credit and personal references
- Personality traits: motivations, management acumen, goals

Be prepared to answer questions such as:
- Why are you interested in becoming associated with our franchise?
- What are your goals in the next five years?
- Why do franchisees pay the various fees franchisors request?

Do your research on the company and understand how your potential relationship with it would work. Ask yourself what the franchisor is looking for in a potential franchisee.

But remember: the screening process is a two-way street.

You should also use the opportunity to ask questions and evaluate the franchise management. You are making a hefty investment that requires substantial and thorough investigation.

Next: Industry Breakdown