The first thing you should know about buying a franchise is that it’s a commitment you shouldn’t take lightly. You should be aware and well informed of what to expect before you go ahead and purchase one.
While there are numerous advantages of buying a franchise, you’ll need to be a hard worker, and show dedication and determination if you want to ensure that your business is profitable. Here are five steps to ensure that you’re making the right decision.
Step One: Decide Whether Franchising is the Right Move For You
Franchising isn’t right for everybody, so it’s important that you evaluate your suitability as a franchise owner early on. This is the best way to avoid wasting your time by pursuing something that is right for you. The agreement you sign when buying a franchise is a legal document and so you’d have no choice but to adhere to the franchisor’s system.
A franchise-based system revolves around a network of businesses that operate consistently regardless of location. If you feel that you want to be in complete control and make every decision yourself, starting a business from the ground up might be a better way for you to go.
Step Two: Make a Shortlist of Potential Franchises
There are so many franchise opportunities available to you that you might feel spoiled for choice when it comes to choosing the right one. Begin by listing the industries and brands that are of interest to you. And only choose those that you’re fit in with your passions, organisations that provide flexible opportunities when needed, and that suit your skillset.
One big advantage of franchising is that you don’t necessarily need expertise or experience in the industry that your potential franchise is in. This means that you can start a business without investing needless time taking apprenticeships, vocational certificates, or university courses. So keep your mind open when making your choice.
Step Three: Evaluate Each Franchise Individually
Here’s where you need to exercise due diligence with each of your potential franchises. In order to feel confident in your purchase, you should search each opportunity thoroughly. Make sure that you do the following:
- Look at the franchise-dedicated website of the company.
- Attend a discovery day, which is typically held at the head office of the franchise.
- Talk to current franchisees involved in any franchise you’re interested in.
Step Four: Speak With Franchise Professionals
When you’ve finished evaluating your potential franchise options, and you’re confident that you’ve found the right one for you, you should next consult with an experienced franchise solicitor. The majority of general legal advisers won’t possess the necessary knowledge to afford you the guidance that you need so you may need to search for specialty law practices.
Step Five: Write Your Business Plan
If you assumed that because you’re not starting your business from the ground up, you won’t need a business plan, that isn’t true. Each franchise is unique, and you should put your objectives and ideas down on paper before setting up your business.
A business plan won’t only help you form an idea in your mind of what you want to do, and plan for any unforeseen problems, but it will also be vital if you ever decide to seek funding. If you want to finance a franchise, a lender will ask you to prove that you’ve carefully considered every part of your business and that it has a good chance at success. Otherwise, you won’t give them much confidence that you can pay it back.
Make sure to include a business overview, financial projections, a market research analysis, and details of your employees and chosen location. Calculate the total amount that you’ll need to invest, your regular outgoings, and your expected break-even figure. You should also include information regarding how you will run and manage your unit in accordance with the business model of the franchise.
Buying a franchise isn’t a quick process. It requires an investment of time and effort if you want to make sure that you’re doing the right thing. So take some time in working through each of the above five steps in order to give yourselves every chance of succeeding.
Avoid temptation to cut corners, as you would likely regret it later on. Tackling each of the five steps with a sense of caution will afford you enough time to be confident in your decision, and possibly gather more funds- both of which will help you to get your business started and grow.