Are you one of many people that wants to know how to buy a franchise? Starting a franchise is not as easy as you may think.
Being your own boss offers a variety of perks, but there are a few different things you need to know. You want your franchise to be as successful. That requires a lot more than searching a list of franchises and their prices to buy a franchise.
These are the steps you should follow when buying a franchise.
Finding A Concept That Fits
When you’re looking to buy a franchise, I suggest using the IFA (international franchise association) website or other popular websites.
Finding a concept that fits can be time-consuming, Consider the cost and location of the franchise, and ask yourself a few questions. Would I purchase this product and why? Is there a lot of competition or no competition in my area and why?
Questions become very apparent when you buy a franchise so ask yourself questions before you consummate the deal.
Are human resources available for you? A good labor market is a must.
What financial resources do you have? Most franchises require that you have a $300,000 net worth.
The more information you know about what you need and want, and your financial status, the better you will be able to make a knowledgeable decision about buying a franchise.
Submitting the Application to Buy a Franchise
To get the ball rolling, pick at least two industry categories, including
- Healthcare
- Cleaning
- Foodservice
- Senior Care
- Automotive
And many more. For each category, you choose, pick at least two, a maximum of three, companies or concepts you would like to have more information about.
There’s a chance you may not find what you’re looking for the first time. The good news is you can search the categories again to find different industries that are a better fit for you.
Legal Matters when you Buy a Franchise
Once you reach this step, you’ll get a detailed look at the industry, as well as, the role of the franchisor and franchisee, the business model, and the company.
This is the time you will receive the company’s FDD or franchise disclosure document. This disclosure document can range anywhere from a few pages to many pages, but it is important you read the document in its entirety.
As a matter of fact, I would have an independent attorney look over all documentation before signing. Don’t let anyone rush you as you have 14 days after receiving the FDD before you can accept the offer to buy a franchise anyway.
Support and Training
When you’re a franchise owner, there are a variety of perks.
Having this title means a lot of things are done for you, including concept creation, research, product and the development of services, and you have access to many trade secrets.
You will have information regarding training and expectations. Use this time wisely and ask yourself if this is going to fit into your business plan.
Disclosure Review
The disclosure review or Discovery Day is the time when you have a sit-down with the franchisor representative. This happens before you buy a franchise.
The franchise disclosure document will be discussed along with the available territory. This is the best time to get answers for all of your questions, and a second chance to review the FDD.
The franchisors representative will ask you a lot of questions. The reason is to evaluate as to if you will fit in and be a successful franchise owner that will represent the franchisor’s brand well. After all, this is essentially a partnership one that will last from 7 to 15 years so answer carefully the questions presented.
Due Diligence
Due diligence is when you dot all of your “I’s” and cross your “t’s”.
Once you reach this step, you should have a clear understanding of a variety of areas, such as the company’s industry, operations and support, and marketing.
Before you make a final decision, contact each franchise’s corporate office to conduct a complete evaluation so you know exactly what you’re getting into.
This is your decision so don’t buy all the hype, dig deep and get the details yourself.
Own Your Own Business vs Buy a Franchise?
There are advantages to both owning a franchise and owning your own business.
If you are looking for a business with a high success rate and brand recognition, then a franchise is ideal.
All franchises operate using a similar system, one that has proven great success many times.
As far as brand recognition is concerned, franchises are businesses that are ready from day one and waiting for you to take your place in the scheme of things.
If you’re ready to let explore with your creativity and experience professional freedom and growth, owning your own business is ideal.
If you’re a creative person, you can use your ideas to help make your business dreams a reality even if you buy a franchise.
Having your own business means you are your own boss, and you can work whenever you want. But you will find that being off means no money coming in so you have to plan off days very closely.
How Do Franchises Make Money?
Franchises make money a variety of ways. But primarily from profits generated from the business after cost and expenses are deducted from your revenue. I like to review my expenses and cost monthly to see if anything can be eliminated or if we need to market and generate more revenue.
Some money-making ways including having their businesses purchase certain products they can sell, such as soft drinks, as well as, other sideline items such as children’s toys. Even monetizing your website if you own one. Sometimes the franchisors control the website so that may or may not be an option. But you understand what I am saying
Before you jump into the franchising business, learn everything you can about this business, and understand that there is a process, and it will not be an overnight success.
On the other hand, franchising can be great for you if you’re willing to conduct the proper research and follow proper channels.
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