Buying a franchise is a big investment – For many people it will be the second biggest investment of their life, after buying a house.
We have put together some tips on buying a franchise to ensure you’re making the right investment. This will be a series – each article will have the steps to consider when buying a franchise.
Avoiding failure in any business, franchises included, begins a long time before you sign an agreement and commit to a contract for a significant period of time. It begins when the idea of owning your own business first enters your mind.
Given the financial and contractual nature of the franchising relationship, it is crucial that prospective franchisees thoroughly evaluate the business opportunity and the franchisor before committing to buy into a franchised business. Just because the anecdotal evidence strongly suggests that franchising is not as risky as an independent business, this should not be considered a guarantee of success.
The truly basic steps of buying a franchise can be summed up as follows:
- What do other franchisees think?
- What does the franchisor say?
- What do the numbers say?
- What does your accountant say?
- What does your lawyer say?
- What do you think?
Potential franchisees often view their chosen franchise opportunity as a means to an end – a means to long term financial security and wealth. This may well be true, but in between now and then, there’s a substantial amount of work to be done.
Buying a franchise or pursuing multiple franchise opportunities is a serious business. It is a sad and inexplicable fact that many potential franchisees do not spend the time, effort and money a serious decision of this nature demands. By failing to take those all important steps - they can be entering a business they are ill-suited to and unprepared for.
Hopefully, you won’t be one of them.