Sometimes I feel that I fall short in my quest to save you from potentially experiencing financial pain with regards to franchise ownership.
I’ve been writing a monthly article about franchising here for almost 6 years. I provide tips and advice based on my real-life experiences in franchising. I’ve been in franchise management, I’ve owned a franchise, and I’ve sold franchises. I know what works and I know what doesn’t. My main goal here and in my franchise consulting practice, is to provide helpful information. Information you can use to lower your financial risk (if you decide to become a franchise owner) while increasing your chances of success. Am I succeeding? I hope so.
3 Franchise Tips From A Different Angle
Sometimes, it pays to look at things from a different angle.
So, instead of offering tips on what you need to do when buying a franchise, I’m going to share 3 tips on what you mustn’t do when buying a franchise. I think you’ll find them to be helpful.
1. You mustn’t dismiss the impact of your potential decision on your family
Your immediate family is going to be impacted (big-time) if you decide to buy and run a franchise business. This is serious stuff; you need to treat it as such. Here’s how:
Schedule a formal meeting with your immediate family members.
During this meeting, share the reasons why you’re thinking of going this route. Tell them that you’re going to learn all you can about franchising. Be honest about the financial risk associated with going into business. Ask them about their concerns. If they’re frightened about your idea, be empathetic. Ask them what you can do to alleviate their fears. Do whatever it takes to get them in your court.
2. You mustn’t be cheap
You may be about to invest $150,000 (or more) in a franchise business. It’s a lot of money. A few hundred dollars here and there (in comparison) is not. Don’t be afraid to spend your money on…
A. A Business Plan for Your Franchise
If you’re planning on getting a small business loan for your franchise business, the way to up your chances of getting it approved is by submitting a detailed business plan with your loan application. Check out this video series on business plan creation.
If you’re knowledgeable about business plan writing, you may be able to put your business plan together yourself, for free. If you’re not, consider purchasing business planning software to help you put together a customized business plan.
You should hire an accountant (preferable a CPA) who’s familiar with things like small business payroll, and small business taxation. A CPA can also help you setup the correct business entity for your specific situation.
You should also hire an attorney who’s familiar with franchising.
Today’s franchise attorney’s stay up on all the latest franchise laws, which is reason enough to hire one. In addition, a franchise attorney will need to go through all the documents you’ll be receiving from the franchisor-including the actual franchise contract.
3. You mustn’t skip the chance to visit headquarters
If the franchisor invites you to franchise headquarters for a day, book the trip. However, you should only book the trip if you’re getting real close to making a yes or no decision. Otherwise, it’s a waste of your time and theirs.
Spending a day at headquarters is your chance to meet face-to-face with the people you’ll be sending royalty checks to every month for the length of your franchise contract. Take advantage of your alone time with the CEO of the franchise by asking good questions. Try to spend a little time with each department. You’ll be able to see first-hand how they operate, and if you feel they’ll do a good job supporting your franchise business.
I hope you found this approach…my tips on a few of the things you mustn‘t do when buying a franchise, useful.