Don’t Rush in!
There are many things to consider before buying a franchise. These include, but aren’t limited to, expenses, potential profitability, demand for products and services and franchisor track records. Before you commit to any agreement, it’s highly recommended that you take the time to perform thorough research.
Learn What Questions to Ask Before Buying a Franchise
Are You Prepared to Be a Franchise Partner?
One of the things to know before buying a franchise is that in order to be successful, you’ll have to possess certain characteristics. As a general rule, successful franchisees are hardworking, ambitious entrepreneurs with particular skill-sets. Therefore, before you start researching franchise opportunities, you should take the time to assess yourself. You must evaluate your current qualifications as well as decide the number of hours you’d be willing to work per week, what industries you’d be happy operating within, the types of tasks you’d be comfortable completing and so on.
By doing this, you’ll be able to narrow down your list of franchise opportunities to just a handful of possibilities. If you’re still unsure whether you’d be suitable, you can research existing franchisees and identify what traits they possess and then compare them with your own.
Does the Franchisor Have a Good Track Record?
There are many brands currently operating in the franchise industry. But not all of these franchisors are successful. You must identify those who have a proven business model as these will give you the best chance of building your own profitable business. Don’t forget, you’ll be able to talk to multiple franchisors and even attend a number of discovery days to get your queries answered directly.
If you’re not sure of what questions to ask before buying a franchise, here are a few suggestions:
- Are the products or services the franchisor offers going to continue to be in demand for the foreseeable future?
- Does the brand have a history of economic success?
- And will you be given an exclusive territory?
If the answers you receive aren’t satisfactory, you need simply move on to the next possibility.
This being said, you may find it easier to enlist professional help – find out if you should use a franchise consultant.
How Much Will It Cost You?
Prospective franchisees are entitled to know exactly how much investing in a given franchise will cost them. This is why franchisors often distribute detailed prospectuses containing all the relevant financial figures. But remember, you’ll have to pay more than just the initial franchise fee. In fact, the majority of franchisors will charge you fees related to marketing and operational support every month. These will normally amount to up to 10% of your turnover.
On top of this, you’ll likely also be required to buy equipment, rent an office or purchase a store, pay for insurance and that’s not all. It’s for this reason that you must closely and carefully read any franchise agreements that are presented to you. While it’s true that most franchisors are ethical and transparent about expenses, you can’t be too careful.
Are Existing Franchisees Satisfied?
As part of the discovery process, most franchisors will give you contact information for several of their current franchise partners. These individuals will be able to provide you with a clear and honest picture of what it’s really like to work under the umbrella of the brand in question. They’ll be able to tell you whether the franchisor has given them sufficient support, if they’ve found it easy to follow the business model, how their operation is faring and whether they would recommend that you join the network. You should speak to as many different franchisees as you can, as one individual’s experience may not be the same as another.
Request Expert Guidance Today
Now you know what things to consider before buying a franchise, you can begin to effectively evaluate the franchise opportunities that are currently open. But if you’re unsure of how to proceed, you can contact Franchise Fame or read up on how to choose the right franchise system for you.
