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The Dos and Dont's of Buying a FranchiseSuddenly for whatever reason, the idea of being your own boss, taking control of your own future, has become obsessively irresistible. You feel like your life is passing you by. You're stuck. You’re in a quandary. You’re hungry for success and you’re not sure what to do. You know your success depends on making smart choices.
Most important decisions you’ll make in your life are tough and complex. You dread making these decisions because they almost always come with a degree of risk. Buying a Franchise is certainly a life changing decision involving complex considerations that will require you to focus on what you want your life to look like. What’s important to you?
With that in mind, below is a check list to buying a franchise. The checklist is not exhaustive, but provides a good basis for a good decision that will increase the odds of your success in franchising.
Checklist to Buying a Franchise
DO
- Use a franchise consultant. Franchise consulting services are free. Your decision should get you where you want to go. A good franchise consultant will help you specify your objectives. What do you want to accomplish and which of your interests, values, concerns, fears, and aspirations are most relevant to achieving your goal? A franchise expert will help you think through your objectives and give direction to your decision making.
- Establish a franchise business development plan. This is the foundation of your franchise. Most successful franchisees follow the franchise system. Nevertheless, you should have a vision of what you want your franchise to look like. How are you going to promote your franchise? What’s your sales strategy? How do you monitor and maintain excellent customer service? What's your policy for hiring and retaining excellent employees?
- Audit your franchise compatibility and suitability. Franchising, owning your own business is hard work. Are you, your spouse and your family supportive of the decision and are you ready to make the sacrifices in the way of money and time in order to fully commit to a franchise business? Do you and your spouse have the business skill sets compatible to the franchise business you want to own?
- Conduct a financial audit to assess your financial resources. Get a clear understanding of your risk tolerance. What is your comfort level for your investment? How do you intend to fund your franchise? Home Equity Loan or a Small Business Loan? Do you have enough liquid cash resources? Do you have enough savings to fall back on while your franchise business develops?
- Research and evaluate your franchise options. A franchise consultant will help you ask all the right questions and get the answers you need. Does the product or service you propose to sell have a market in your area? Franchise owners know their industry. What’s the market’s potential? What are your margins? Who are my competitors? Most important, who is my customer?
- Hire an experienced franchise attorney. He should be familiar with industry franchise agreements.
DON'T
- Make your decision too quickly, or too slowly, or too arbitrarily. Remember most of us don't get trained to make decisions. It's not what you decide, it's how you decide.
- Assume anything. Take control and be proactive in seeking the franchise you want. Stick to your core values and beliefs and the needs of your family. Don't just sit back and watch what comes your way. Think about your long-range franchising goals.
- Ignore your current situation. What is it about your day to day life you don't like? Why are you considering a change to business ownership? Will buying a franchise solve the problem?
- Under estimate the tradeoffs of your decision. Will the loss of company benefits, including retirement plans, be outweighed by the upside potential and self-pride rewards that would come from owning your own franchise business?
- Don't obsess over your decision. Know when to quit looking. The perfect franchise business solution seldom exists. It's important to be careful and thorough in laying out your objectives. Once you've made your decision apply your energies to developing your franchise.
Lastly, work hard to build a good relationship with the franchisor. The franchisor is an asset to your business. Successful franchise owners trust the franchise model and implement current and future business strategies. Your success is a collaborative effort between you, your franchise consultant, and the franchisor. Take charge of your own destiny.
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