4 Elements – What A Franchisee Should Consider Before Buying A Franchise
What a Franchisee should consider before buying a Franchise? Franchising is an opportunity for people to go into business for themselves. Franchises offer lesser risks because business structures are already established as well as a strong brand name. The franchise industry has done a good job selling its advantages especially to individuals who have minimal experience in running a business. The franchise applicant should know what Franchisee Prospects should consider before buying as risks do exist and it is important to consider these 4 elements before buying a franchise.
1. Due Diligence
This is all about assessing the investment into your franchise before committing any money and signing an agreement for the long term. Do your homework on the franchisor and evaluate the opportunities of the new business you plan to delve into. Too any people assume that if a franchise has loads of franchisees, attractive stores and a great product all is fair and well. But you should realize that even if franchisors/franchisees are profiting, it is no guarantee that the same would happen to you. You need to research and appraise the system. You need to find out if it is a perfect fit for you and a reflection of your personality or personal aspirations.
2. Read the contract
The contract that you sign is a very long one. You should never sign what you do not understand even if it is punctuated with legal jargon. You are buying into a brand, business and system. If anything goes awry, it is your problem; you are the one who has all to lose and not them. So ensure you read the fine print thoroughly and get legal counsel to help explain all the grey areas that you may encounter.
3. Always have a Plan 'B'
Despite the prospects of your franchise and their best intentions, bad things can still happen. You need to be prepared for this and not be caught unawares. What this means is that you should not burn your bridges because you are entering a new market. Maintain your skill-sets and professional contacts. You should also have contingency cash tucked away to avoid bankruptcy. Never get infatuated with a concept. You need to be honest with yourself and know when to walk away. Be sensitive and attentive to inconsistencies that might pop up in a contract and take a hike when it does not all add up.
4. Contact Franchisees
Contact franchisees with a head start and pick their brains. You want to go for those that have experience and are running the franchise you are interested in. You need to get in touch with these resource people before you sign the dotted lines. Get to ask questions about the system, franchising support, profitability, advertising and their overall experiences. In addition, you need to know how much it costs to set-up. A list of all franchisees and contact information can easily be assessed from the franchisee guide. There are never any guarantees when it comes to a business investment. It helps to always prepare accordingly before you take the plunge.