Top 10 Tips for Buying a Franchise

So you want to be a business owner? Franchising provides a phenomenal way for future entrepreneurs to flex their business muscles while having the comfort of a franchisor’s support, marketing material and brand name.

Here are some tips to keep in mind for those looking to get into the industry.

Focus on your skills.

With franchising, your skills become your best asset. Identifying and writing down your strongest skills and bringing them to the table better prepares you for a specific franchise and allows you to see where you would be most successful.

Research the brand’s ROI.

You want to make money – we all do. Searching for a brand that provides you with gross revenue numbers and profit margins is important to look into. Read the FDD carefully –it’s one of the most valuable tools you have when considering buying into a company.

Don’t immediately flock to “the hot new franchise” concept.

Everyone wants to get into the ground floor of an up-and-coming and popular business. The key with franchising though is you’re buying into an established, well-vetted and proven-over-time concept. You want to make sure the brand you’re buying into has withstood both bad and good economic times.

Remember franchising is still a system.

Some individuals feel that now that they are business owners, they have freedom to change certain aspects of how a company is run. This is false. Technically you are the boss, but with a franchise, individuals must follow the uniform system that is provided.

Do your due diligence.

Make sure to reach out to former franchisees, current franchisees and research the brand online thoroughly. What might seem like a great investment may turn sour if you don’t do your homework. Gaining knowledge from individuals who have gone through the process is key when making an educated decision.

Understand that even if it’s a franchise –you’re not guaranteed success.

Franchising is still a business, and the business landscape and economy shifts just as easily for franchises as it does for independent businesses. Even with a proven system, don’t expect to sit back and watch the business succeed.

Come up with a budget.

Franchises come in all shapes and sizes and determining your finances is vital. There are many resources online that can help you do this. Two words: Business plan. A great resource is the Small Business Administration website. Check it out here.

Research multiple methods of financing.

Lending, loans, 401Ks, direct financing –all of these are viable options for those looking to secure a franchise. Funding a business can be a daunting task, so make sure you know precisely what method is best for your situation, budget and business. Question banks and investors – that’s what they are there for.

Get legal.

Franchise attorneys are a great asset. Having someone look over a contract and explain it before you sign is important before making a big business commitment. Lawyers can explain precisely what a potential business owner should expect once they sign on the dotted line.

Check the market saturation of stores.

If you’re going into business, you don’t want competition interfering with your sales and exposure. Know what you’re selling and who else is selling it in your area. Location, real-estate and visibility are all key when it comes to success. No one wants six chicken wing concepts on one block. Make sure to really vet the area you’re looking to open in and find a segment that’s not represented.