The ABC's of buying a franchise.
For this week's blog we thought we might have a little fun with the franchise buying process with an easy to use, easy to remember "ABC's of Franchising" guide.
This by no means is perfect but should serve as a helpful guide to anyone who is exploring the acquisition of a franchise.
Created from years of working in the franchise industry and helping hundreds of people become franchise owners.
Allow at least two weeks to review a franchise disclosure document and franchise agreement before you sign.
Beware of fear.
Consult with a franchise professional like The Franchise Insiders.
Decide on how much time and money you can invest in a franchise BEFORE beginning your search.
Educate yourself thoroughly on at least three-five franchises before committing to invest in one.
Focus on your franchise search. Commit 3-7 hours per week to the project. This is your future, after-all, it's worth it.
Grow your online and off-line network to help spread the word once you open your new business.
Honest: Be honest with yourself about the franchise you are investigating. Is it a smart choice? Is it needed in good times and bad. Will it be relevant 10 years from now?
Include family in your franchise search early. Let them participate and get their feedback.
Job: Don't buy a job! Is the franchise you are investigating scalable? Can it grow to a point where it does not need your 9-5 involvement? If not. Move on.
Knowledge: Gain knowledge about the franchises you are investigating by speaking to franchise owners. You need to hear real world experience and not just web reviews.
Learn from top performing franchise owners who have joined the franchise you are investigating during the past three years. Model your behavior after theirs. Learn from the best who have succeeded quickly!
Mentor: Once you become a franchise owner. Seek out an owner in your system who is a top performer and ask them to become your mentor.
Nab multiple units/locations if your budget allows. This will enable you to reach return on investment faster, make you more money, and increase the value of your franchise company should you wish to sell it in the future.
Office: Determine if you'd like to have a business that needs an office or if you'd like to work virtually from home or elsewhere.
Professionals: Seek out professionals such as franchise attorneys to review your franchise agreement and accountants to help you set up your corporation.
Questions: Utilize our top questions to ask franchisees and franchisors to guide your conversations during your franchise search.
Rollover: Learn about how loans such as 401K Rollovers and SBA can help fund your business. You should also consider a Home Equity Line of Credit or Cash Out Refinance to fund your franchise. We have contacts who can help you!
Strategize how you and your family will work your new business. Who will commit full time? Who will keep their job initially. How long will they keep their job and when can the whole family get involved. Seek out existing franchise owners to learn how they did it.
Trust the franchisors you are speaking with. They are not trying to SELL you anything. Like you, they are looking for their perfect franchise match to repeat a successful, proven, money-making formula in a new (hopefully yours) market. Your goals are tied together. Trust them
Understand the franchise agreement you are signing. Have a professional review it but limit what you spend. Franchisors do not make material changes. Ask your franchise attorney to point out the things you need to understand.
Value: This is NOT a one sided deal. No one is guaranteed a franchise no matter how much money they have. Demonstrate YOUR value to the franchise you are interested in. Show them how YOU are perfect for them and will be one of their most successful franchise owners.
Work hard to build your business. Even if you are investing in an absentee business. The work you put in, in the beginning will pay huge dividends down the road in terms of the money you make and the freedom you achieve.
Xponential. OK we reached on this word but hey... it works. Does your franchise give you opportunity for xponential growth? Simple rule: If it's not scalable. Don't invest.
You: Is the franchise you are investing in a good fit for you and your life? Do you have the funds? The time? Does your family support you? If so, proceed.
Zoom in on the financials in the Franchise Disclosure Document (FDD) including audited financials and Item 19. Do the average revenues look appealing to you? Are franchisees you are speaking with seeing similar results? Has the franchisor ever had a bankruptcy or litigation? If so, find out why.