It is essential that you get advice from professionals concerning your franchise purchase. Of course there is a cost for this advice but this is money well spent. Good advice and preparation will help to ensure that you make the right choice and that your business gets off to a good start.
Lawyer
Your franchise lawyer will be able to read through the franchise contract and provide further explanation and understanding. It is important to understand this document as it is the plank on which your relationship with the franchisor is built. The contract spells out both yours and the Franchisors rights and obligations to each other. In a successful franchise arrangement it is unlikely you will ever look at it again, it is however essential that you understand it.
The lawyer will also work with you in any lease arrangements and trademark right to use documents.
Accountant
The Franchisor will discuss the profitability of the business with you and will provide you with an indication of possible returns. You need to research these figures for yourself. You need to examine as far as possible whether there are enough potential clients in your geographical area and satisfy yourself that the figures provided are achievable. Own the figures, because you have to live with them.
Existing Franchisees
Franchisees will normally be prepared to offer valuable assistance. They will be able to tell you how realistic the figures have been in their experience. Existing franchisees also will be able to discuss their working relationship with the Franchisor and his team and how supportive they are on a day to day basis. It is common practice that the Franchisor will ask you to sign a confidentiality agreement before you have the opportunity to talk to his franchisees.
Some Franchisor's will recommend that you spend a day with an existing franchisee and this can be a valuable opportunity. They will become your colleagues and have all been there at the decision point that you are now at. It is a good idea to get a couple of choices of franchisees to talk to you to ensure that you do not get a biased answer.
Market Research
Perhaps as important as it is to talk to the professionals, it is so important to do your own research, get an understanding of the area that you will be operating in. If it is your home town that you will be working in don't assume you know it. You need to understand it from a business perspective.
Talk to potential users of the service you will be providing. calculate how many potential users there are in the area that you will be taking on. Yellow pages is a great source of information as is your local business link. Think like the owner of the business that you are considering buying. Have a look at publications and web sites that you may want to utilise for your advertising and see how strong the competition is. Remember competition is not a bad thing, it proves that there is a market that has already established. You just need to be sure that you get your market share. Investigate your competitions products as this will give you an understanding of where you have an advantage over them. |
