Taking on a franchise is a big step. Whether it is a step towards success or financial crisis depends largely on how the process is undertaken.
Here are five things to avoid if you want buying a franchise to be a positive and beneficial experience:
1. Don't rush into anything
There are so many things to consider when you're thinking of buying a business that it has to be a slow process. Otherwise, some important factors are likely to be overlooked in the rush.
This procedure, by which a potential franchisee thoroughly investigates the business they intend to buy, is called due diligence.
2. Don't accept any claims without proof
Any information presented to you should always be verified before you accept it as the truth.
This sounds very cynical, but it is your professional duty to be certain that the company's finances, assets, and goodwill are as the franchisor states; future employees' livelihoods, as well as your own, will rely on this.
This includes statements regarding qualitative issues, such as the growth rate of the company to date, any training systems in use and any unique selling points that will enable the business to thrive in a competitive market.
3. Don't keep concerns to yourself
The franchisor has a wealth of experience in the field you propose to enter and you should prepare a comprehensive collection of questions for them so you can get an in-depth picture of the franchise.
If any answers are not as you would hope, discuss this with the franchisor; you may have misunderstood or the franchisor may be able to address your worries and put your mind at rest.
If the franchisor can't answer a question at all, find a way to get the answer from another source and consider whether their lack of an answer is, in itself, a cause for concern.
4. Don't think you have to know everything
You may have what it takes to be an excellent manager but still experience great trepidation when it comes to interpreting accounts.
Don't be embarrassed by this; if accountancy were easy, the professionals wouldn't get paid so much.
Therefore, unless you are an expert, it makes perfect sense to ask somebody who understands the language of finance to explain any such information to you.
5. Don't take a back seat
In the course of your discussions with the franchisor, you will develop a picture of what is expected of you and what you can expect in return.
When this translates to the creation of a franchise agreement, don't leave it all to the lawyer; let them know what you have been promised and ask them to explain the agreement to you completely before you add your signature and make that final commitment.
Due diligence protects everybody: It protects the franchisor because it means that they are putting their business' reputation into the hands of a responsible person; it protects any employees you will have because you are making sure their training and work conditions will be adequate and, most of all, it protects you, because it's only by knowing exactly what you are taking on that you can be sure that the franchise is the right fit.