Consider These Things Before Purchasing a Franchise
Business owners who’ve been successful may consider expanding to a franchise that demonstrates a proven track record. While you may lose some autonomy, it can be very rewarding financially for you and your staff. You need to very carefully consider all of the angles before a franchise purchase.
If you’re thinking about a franchise purchase, please consider the following.
Do Your Homework
As a business owner, you won’t make a major decision without diligent research. You need comprehensive and thorough information on the options within your industry. A franchise purchase can make sense to be a part of a larger business that provides national brand awareness and recognition, as well as an established customer base.
Andrew will tell you that franchise agreements can vary from one industry to another. However, they are similar in that they all outline company requirements and levels of support. Work with Andrew and compare the details of the agreements of the franchises you’re considering, and analyze them against your personal expectations. After you and your business advisor narrow your options down to a few companies, check each one for a solid reputation, strong financial growth, and a franchise agreement that’s partner-friendly. Use the expertise of your business advisor, because this time-consuming research is an important investment in your future.
Understand the Pitfalls of a franchise purchase
Many franchisors will provide information about opportunities on their websites. In addition, several franchisee associations network online and provide candid profiles of companies, even detailing aspects of those with questionable reputations or practices. The Federal Trade Commission (FTC) requires that franchise businesses make available what’s called a Franchise Disclosure Document to all prospective buyers. This gives prospective purchasers of franchises the information they need to analyze the risks and benefits of a franchise investment. The FTC requires franchisors to provide all potential franchisees with a disclosure document containing 23 specific items of information about the offered franchise, its officers, and other franchisees. The company should have this document available on its website.
- Be Prepared for a Financial Transition
The notion of a franchise purchase may appear to be expensive, the cost may be less than financing a new business on your own. The franchise requires that you pay franchise royalties—however, you’ll get a great deal of support in exchange. Now you shouldn’t expect to make bank in the first week, so create a financial plan with Andrew’s help to allow you to transition seamlessly to your new business model.
- Leverage the Support of the Franchise
Your franchise will be a success by maintaining a strong market position…and that means making certain you have adequate training and the proper tools needed to deliver the best products or services. This can help you stay up-to-date with industry testing and certification, as well as industry news and developments. As you conduct your due diligence on the franchise, look for strong marketing support and on-going development in company conferences.
- Make Sure You Can Meet the Franchise Standards
Be certain that your operations meet the standards set out by the franchise. The company has a reputation at stake, and one of the core tenants of a franchise is consistency. That comes from following the rules created by the franchisor for operations, products, and services. Being your own boss has its benefits, one of which is making the rules. Make sure you are comfortable playing by the franchise rules.
Knowledge is Power and Professional Support is Critical
Running a franchise isn’t easy, but a franchise system allows you to earn and do more with its backing, brand, and support. The degree of security that comes from buying a franchise can be significant in shaping your future.
If you are considering a franchise purchase and would like more information, click on this link to buy and download a copy of my book, “Successfully Buy Your Franchise“.