How To Buy a Franchise and Where To Find a Good Opportunity?

You’ve already decided that you want to buy into a franchise. Perhaps you’re convinced that it’s the best option for you after considering the multiple benefits that come with it. From a proven business model to marketing and advertising help and even training and ongoing support – there is very little that makes a franchise business an unattractive option.

But buying a franchise is a big deal. Because the relationship between you and the franchisor will continue over the medium to long term (think of it as around five to ten years), you need to be ready and prepared – mentally, physically, financially, and emotionally.

So, if you’re wondering how to own a franchise and what considerations you need to keep in mind, take a look at some of the guidelines below.

How to buy a franchise

In order to become an owner of a franchise, there are several steps you need to take – from the process of research to signing on the dotted line and opening your doors to your customers. We’ve gathered some of the most crucial aspects you need to take into consideration when you embark on the journey to owning a franchise.

1. Evaluate yourself

The first step to doing anything successfully is knowing yourself. This is a critical aspect if you’re going to embark on the world of franchising. Before you buy a franchise, you need to be fully cognizant of your strengths and weaknesses, your personal attributes, what you can and cannot do, and more. With this knowledge, you’ll be able to determine what is the right opportunity and what is the best franchise business for you to buy.

2. Choose the right industry to enter

All franchises are not suitable for everyone. Some require specialist knowledge and experience (think of insurance and accountancy franchises for example). Others require no experience at all. But what you need to do is research the industry in-depth and figure out what you’re leaning towards and what interests you so that you can make a commitment to it for the foreseeable future.

3. Get to grips with the costs and fees

Even if you were to purchase an already existing business, you’d still need to come up with the funds for it. The same is true for a franchise business. It’s a business nonetheless and it requires paying costs including the initial franchise fee, your minimum capital investment, royalty fees, marketing and advertising costs, and more. Where do you stand and what can you reasonably afford? Knowing the answers to these questions will help you make an informed decision.

4. Don’t skip the fine print

When you’ve identified an industry that you’d like to enter with your franchise business, you’ll receive a lot of documentation from the franchisor. This will include the Franchise Disclosure Document and it’s critical that you read all the fine print during your due diligence process so that you know where you stand and what your rights and obligations will be. It’s also important to dig around for reviews by other franchisees online to see if they are happy and satisfied with their franchisor-franchisee relationship. If you need help with the fine print, it’s advisable to consult a professional.

5. Attend a Discovery Day and speak to franchisees

Buying a franchise business is a big responsibility. Although many franchisors claim that no previous experience is required to get started, keep in mind that it can come in handy and that you should get as much information from the franchisor as possible before you sign the final agreement. It’s also good to attend a Discovery Day where you can talk to a number of franchisees to see what they think, what challenges they have faced, how the franchisor has helped them, and if they would do it all again.

Another piece of advice is to actually spend time thinking about the questions you should ask a potential franchisor on a Discovery Day to see if it’s a good fit for you.

6. Work out the bottom line

You should also consider doing a cost/benefit analysis where you study the franchisor’s profit and loss statement, check out whether there’s been litigation against the franchisor, and if so, to what extent it has been resolved successfully. You also need to know where you stand financially. This ties in with what was mentioned above.

7. Explore financing options

Buying a franchise involves a minimum capital investment and this will mean that you may need to approach some lenders to help you gain financing. In order to be as prepared as possible, a business plan should be prepared and submitted to your financial institution. In addition, check what type of financial support your franchisor can offer to you, such as helping you create your business plan before submission or even if they can help you secure financing owing to already existing relationships the franchisor has created with lenders in the industry.

8. Study the opportunities in your territory

Because most franchises operate within geographically defined boundaries that house a particular number of individuals, you need to make sure that the territory you’re buying into is actually viable. To do this, you will need to study foot traffic in certain areas, the market potential and scope for growth in that area, and more to ensure that the opportunity is really as lucrative as possible.

9. Sign the franchise agreement

You’re now nearing the end of the process of buying a franchise. The next step is to sign the franchise agreement which will give you the rights to operate your business in your territory with the help and support of your franchisor. If anything, absolutely anything in the franchise agreement is unclear, be sure to consult a professional so that you have more peace of mind and are aware of any potential threats you may face further down the road.

10. Get trained by head office

The fees have been paid, the research done and the agreements signed. What’s next? The following step will be to get trained. This is usually done at the franchisor’s head office and can range from a couple of days to a couple of weeks or even months, depending on the industry you’ve chosen to enter. Training will almost always include things like systems and processes, marketing and advertising, sales (if necessary), customer service, etc. Finally, you’re ready to open your doors to the public.

How to find a franchise

When it comes to the question “what franchise should I buy?” you may feel overwhelmed at all the opportunities available. However, at Franchise Fame, we’ve made this easy for you by offering you not only a fully comprehensive franchise directory, but also the ability to refine your search and look for various different options including the top 10 franchise opportunities on the market.

Bottom line

In closing, choosing and starting your journey towards franchising is a big responsibility and requires thorough research and due diligence. It’s advisable to consider each of the steps mentioned above as you get started to be sure that you’re as prepared for the road ahead as possible. And if any questions arise during the process, don’t hesitate to get in touch with us. We’re just a click away and ready to help!