SA Franchise Warehouse

Buying a franchise?

Follow these 9 steps to lower your potential risk.

1.       Don’t start online – start inside

Before you start your search for a franchise, be sure that you are a candidate for franchise ownership. Figure out why you want to be and business owner and take the time to reflect on what you want your business to look like and feel like. Consider how much time you will have to dedicate to your new venture and the potential implications for your family.

2.       Make two lists

List #1  Focus on what you are good at. Are you a strong salesperson, a skilled negotiator or a people or data manager?

List #2  What makes you, you? Are you competitive, socially conscious, shy or extrovert?

Use your two lists as a blueprint to help you figure out what types of franchise opportunities would suit you. Search for opportunities that will allow you to use your top skills and that suit your personality.

3.       How much do you have to invest?

Starting your search before you know how much you can afford to invest is counterproductive. You don’t want to get super-excited about an opportunity, only to find out that it cost more than you can afford to finance. To determine how much you can afford, you will first need to determine your net worth.

4.       Involve your ‘partner’
If you are in relationship, know your partner in your decision. Buying or starting a new business is a big decision and at some point you will need to lean on them for support. Getting your partner onboard with your idea may well be the first test of your mettle to become a successful franchisee.

5.       Keep your options open

Even if you think you have found the perfect franchise, don’t stop looking just yet. Keep your options open - make it your goal to find at least one or two more concepts that fit your vision, skills and budget as well as the first opportunity you identified. Now is the time to start surfing the web

6.       Do great research

Once you’ve found a few opportunities that are a match, conduct and in-depth study of the franchise model. It’s not difficult; you just have to ask (and keep asking) the right questions.

7.       Use impartial experts

When you think you are ready to make a decision, invest in your future peace of mind and hire an attorney who is familiar with franchise contracts and who speaks franchise legalese – you will want their input on the Disclosure Document and Franchise Agreement.

You should also be getting advice from an accountant who is familiar with small business start-ups and taxation. Their participation will be invaluable in drafting a powerful business plan that you can submit with your small business loan application.

8.       Meet the franchise team face-to-face

The only way to get a real ‘feel’ of things is by making an ‘in person’ (not online) visit. An in person visit will enable you to see their operation in action and get a feel for the company culture. You will also be able to find out if there’s real infrastructure in place that you can call on for support when the need arises.

As a matter of fact, any franchisor worth their salt should want to meet you in person, too.

9.       Don’t discount your instincts

While it’s wise to collect as much data as possible so you can make a fact-based decision, you may not find it as useful as you first thought. Data-driven people may disagree, but data only goes so far. At the end of the day, when you’re faced with putting pen to paper on the franchise agreement, you won’t be looking at your notes, you’ll want to connect with your inner voice – it should feel right.

“The first principle is that you must not fool yourself, and you are the easiest person to fool."

Richard P. Feynman, Nobel Prize–winning physicist