Whether you are sick of your boss, tired of the commute, or just ready for a new challenge, 2018 could be the year to take the next step and become the owner of your own franchise. But before you run out and put your life savings into a new franchise opportunity, there are a few things you should keep in mind about the process.
We spoke with two new franchisees about what they experienced in their own franchise journey. Here now are their top tips to buying a franchise:
Jordan DeCaro, Franchisee with Toppers Pizza in Duluth, Minnesota:
1. Don't cut corners and make sure you do what you are told. I feel a lot of newcomers to the industry would try to cut corners and save money on certain costs. If you trust the process and follow your brand’s lead you will ultimately reach your goal
2. Take time during your decision process. Whether it is real estate, or any general decision, always consider all options and utilize the franchise for advice.
3. Always ask questions. I have learned that no question is a dumb question. Brands typically want to make sure you understand every aspect of the business so you can succeed.
4. It is all about the details. As you go through the process, you will realize that you don't need to give an explanation for this one.
5. Have fun through the process! You are growing a business into a new market, and you are going to kill it!
Cassidi Brown, Coolgreens Franchisee in Dallas, Texas:
1. Check into what you are buying. Buying into a franchise means you are buying their system, their products and their name. Be sure to spend plenty of time watching their stores and systems. Building a franchise system is complex at the least. A successful franchise will have every last detail thought through.
2. Read the FDD. Actually read the Franchise Disclosure Documents at least 2 or 3 times. This will give you an outline of the systems and franchise itself. It can answer a lot of questions if well thought through by the franchisor. It should have all of the past, present and future details.
3. Compose a list of comprehensive and detailed questions. Since you are buying into their system, they should know every nook and cranny of every situation you could possibly go through. Direct questions are the best and as an investor, you should expect direct answers. If they squirm away from one, that is a red flag.
4. ROI - 3 years and Budgeting. The numbers and basic financials should be listed in the FDD. You should create a budget of all the expenses. If the numbers cannot support a return on investment within 3-4 years, you may have to begin weighing whether or not this endeavor is truly in your best interest and worth.
5. Equip yourself with people who are smarter than you in areas where you lack. Consult with a lawyer to make sure that you are not missing anything in the FDD and that you are covered where you need to be. Consult with an accountant over your budgeting numbers to make sure you are actually going to make money and hit your ROI. Speak with other franchisees about their experiences.
Clearly there is no one right way to approach the franchise buying process, but with these tips in mind, 2018 could be the year you take the next step and get into business for yourself.