The actual process of buying a franchise can be extremely overwhelming and quite confusing especially if you are a first-time entrepreneur or first-time business owner. In fact, you might not even know how to buy a franchise. This article is going to give you 4 incredible tips on how to buy a franchise.
For most business owners and entrepreneurs, the natural thought process is to find a franchise in an industry that they like and are passionate about. I truly believe that’s a smart move however, basing your decision solely on a business that you enjoy can lead you to make a critical mistake in the process of box franchise. That’s what I want to avoid for you. Here are 4 incredible tips on how to buy a franchise.
1. Get a reality check – Before you sign any contracts it’s important to take a step back and look at this from a 50,000 foot level. In looking at your financial situation, make sure you know how much money you have to invest and how much time you are willing to spend working on your business. Way too often, first-time business owners make the mistake of thinking they are better off financially than they really are. I strongly recommend to not mix emotions with business as this will come back to haunt you.
2. Understand the FDD – The Franchise Disclosure Document, otherwise known as the FDD, will tell you exactly everything you need to know about the franchise you are considering to buy. The FDD will outline exactly what the franchise company is responsible for and exactly what you as the franchise owner are responsible for. Make sure you understand these very important points. Also, the FDD will identify any former and current litigation against the franchise company. You want to know this information as you evaluate the strength and the character of the franchise. You also have a 14 day window to dissect the entire FDD so use this time wisely to conduct your due diligence.
3. Consult with franchise experts – During your 14 day “cooling off” window, it is strongly recommended that you consult with franchise experts. They are there for your benefit. I highly recommend first consulting with a franchise attorney so they can help you determine if owning a franchise is right for you and your family. Next, I recommend sitting down with the franchising accountant so you completely understand all the tax and legal advantages and disadvantages of owning a franchise. Spending a little time and money now with these professionals will save you thousands of dollars in costly litigation fees in the future.
4. Alignment your current goals and values – After you have completed the first three steps, now it’s time to tie it all together and to choose a franchise that is in alignment with your values and goals. If you can also choose a franchise that you’re passionate about, even better. So if your dream is to spend more time with your family on nights and weekends, do not choose a franchise that requires you to physically be there on nights and weekends. Also, if your goal is to be home every night, don’t choose a franchise with extensive travel requirements.