Finding a Business to Own
Franchise Solutions offers some mistakes you’ll want to avoid when finding a business to own. It’s an important time to get things right. Make sure you don’t do the following when you are doing your research.
Calling only a handful of existing owners
Calling only a handful of franchise owners in the system you are seriously considering is just being lazy. Call them all if you can. Get a feel for the franchisor franchisee relationship and ask them if they would do it all over again or not. Here’s a list of 15 questions to ask franchise owners to get you started on your list of questions you need answered before you invest.
Acting as an expert
Acting as your own expert e.g. a franchise lawyer, an accountant, or a real estate consultant, when you are not is never going to turn out good. Finding a business to own and buy is potentially biggest purchase of your life. This is not the time to pretend you know everything. Consult with experts. It will be money well spent saving you from something you don’t want to get into or getting you into exactly what you dreamt of.
Disregarding solid opportunities in industries that don’t initially appeal to you
Sometimes the most profitable business endeavors are not sexy. In fact, some are downright gross. This doesn’t mean the product or service isn’t in huge demand or the business model isn’t solid. Explore the unexpected, maybe gross and unappealing if the model and demand is right. A good example is the ever growing cleaning franchises industry. Owning a cleaning franchise does not mean you do the cleaning yourself. You manage a staff that does this for you. Keep that in mind when researching industries that are out of your comfort zone. When you own a franchise, your biggest job is growing the business, not performing the services you offer.
Not planning for your own salary or financial needs
You need to expect a ramp up time associated with profits. This can take months to make back the money you invest in a business and not planning for the lack of income you will have during the ramp up time of a starting a new business is a huge mistake. It can put stress on relationships and make success challenging. Make sure to plan for the ramp up time of your new business in advance of signing the franchise agreement.
Not understanding everything you will be held to according the Franchise Agreement
When you are vetting out a business to own the Franchise Disclosure Document is the legal document which is presented to prospective buyers of franchises in the pre-sale disclosure process in the United States. This document is will outline everything from the company information to litigation information against the franchise company, as well as earnings potential. This is the document that begins to inform you of some of the information you need to know before you sign the Franchise Agreement. The Franchise Agreement that you sign is the letter of the law when it comes to what you will be expected to abide by. Read it and understand it so you are prepared to hold up your end of the bargain.