If you're concerned about your career path, worried about layoffs or tired of doing more with less, you may be thinking of quitting and opening your own business.
Franchising can be a great way to go, given the higher success rate of franchised businessed compared to stand alone enterprises.
Of course, as with any business, it takes hard work to be a success and while starting a franchise is an easier path to success, it’s not for those who want to get rich quick or for those who don’t want to work hard.
Here are 10 things that you should know before you buy a franchise:
- Know what franchising is: People enter the world of franchising without knowing the definite meaning of the term. As a result, they sometimes mistake a business opportunity for a franchise and complain when it doesn’t work as a franchise. A franchise is a license or privilege that the franchisor gives to the people who buy a franchise from it; it allows the franchisees to offer the same service/product after paying the franchisor certain fees.
- Know the difference between business-format franchise and product-format franchise: The franchise business can be centered on the product that is being sold or the business model that the franchisor has developed. There are certain differences between them, so knowing which one you want to go for is vital.
- Research: This is the only word that sum up the answer to, “How do I become a successful franchisee?” Research will save you from unscrupulous franchisors or companies that have red flags. It will help you to pick up a franchise business for sale offer with great potential or avoid one that may be doing great now, but doesn’t have a future. It will also help you to find the best deal in terms of franchise fee and other related fees as well as support and training system.
- Read the UFOC: Reading the UFOC is must for people seriously interested in starting a franchise. It will give them all the details they need to know about their chosen concepts.
- Look into the litigation history: While scrutinizing the UFOC, special attention should be paid to the litigation history of the franchisor. Too many cases of the franchisees against the franchisor are certainly a red flag.
- See the ads of the franchisor: If the main thrust of the marketing campaign of the franchisor is on selling franchises, think twice about your decision; because, the main aim of the franchise business should be on selling the service/product.
- Note the training and support system: The training and support system of the concept, which you are starting a franchise of, must be such that people with general business experience can become experts.
- Talk to other franchisees: The present and ex-franchisees of the system are the best persons to tell whether you should answer to the franchise business for sale offer. There will always be two sides of the coin; you have to weigh both the positive and negative comments before coming to a conclusion.
- Hire an excellent franchise attorney: Consulting an excellent franchise attorney is must, if you want to succeed in this line. He or she should be consulted before you sign any franchise agreement.
- Be prepared for hard work: Just because there is a business model to follow and the franchisor provides a variety of help, don’t think that you won’t have to work hard. Starting a franchise will take up much of your time and energy, so make sure you have it before you commit to become a franchise.
The copyright of the article A Franchise Primer in Self-Employment is owned by Sandy Smith. Permission to republish A Franchise Primer in print or online must be granted by the author in writing.
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