When investing in a Franchise, it is just as important for you to research and evaluate every aspect of the company as firmly as they will evaluate you. You must be confident that their corporate vision, goals and ethics are aligned with yours. This is a critical part of a long-lasting and successful partnership.
Here is a Checklist designed to serve as a road map during the process of purchasing a franchise. These steps are designed to keep your decision-making simple while it allows you to evaluate each franchise thoroughly.
Having a process in place when evaluating franchises is the first step to becoming a successful business owner.
✓ Listen to what they have to say
This is the time to soak in everything the franchisor has to say. Can you feel their passion for the products or services they represent? Is this a company you would work for? It is important that during this conversation you confirm that their business goals are in line with yours.
✓ Ask for a Copy of the FDD
If you still haven’t received the FDD, this is the time to request one. The Financial Disclosure Document’s main purpose is to provide you with important information about the franchisor, the franchise system and the agreements they will need to sign.
✓ Pay attention to what they have to say about the franchisor
Most franchisees are very open when it comes to talking about the overall health of the franchise.
Ask them about:
1. The integrity of the product or service.
2. Market tendencies.
3. Franchisor’s commitment.
✓ Product or services
Is there a demand for their product or services? What are they doing better than the competitors? Is this a product/service that has potential for long term growth? Find out about the company’s strengths, weaknesses, opportunities and threats.
✓ Market trends
How does it compare to last year and how do you expect it to behave in years to come? Ask about specific trends and the sustainability of the business.
✓ Franchisor commitment
Confirm that the franchisor is active and engaged with the franchisees. Find out what the on-going relationship is – both financial and professional of the franchisor. Training is Key. Find out about the effectiveness of their training program.
How has franchising changed your family life? If you were to do it all over again, would you?
✓ Meet the team behind the brand
At this stage you’ve gathered enough information about the company to make an smart decision. However, it is recommended to arrange a visit to their corporate headquarters. This is also referred to as the Discovery Day and it is an opportunity to meet top management and departments heads: marketing, training, accounting, engineering, real estate, operations and customer service among others.
This will more than likely be the last stop before you go through final evaluations of the business on your return home so it will be crucial to get your final questions answered. You also want to use this opportunity to decide if you fit with the franchisor’s corporate culture. If you do, then your hard work has paid off.
Use any and all experts that you deem appropriate. Hire a franchise attorney to review the FDD and agreement to make sure you understand all the conditions.
You may also want to hire a qualified accountant to assess the financial strength of the franchisor and assist you with your economic analysis of the opportunity.
If you will be financing a portion of your investment, you should be in discussion with one or more lenders as well.
Your Certified Franchise Consultant has access to proven legal and financial experts with franchise experience in your specific industry who will guide you every step of the way. Simply request one.
✓ Personal Adaptability
This is it! You found the business of your dreams. As you plan to enter life as a business owner make a final self evaluation to be sure your lifestyle conforms to the business model. It is important that your transferable skills are in line with the business and that your short, medium and long term goals are attainable.
Ask yourself the following question: Is this the type of business that will help me achieve my personal and financial goals? If the answer is yes then it’s time to make a decision. You can now be confident that you have carried out a thorough investigation and that you will soon be a Business Owner! CONGRATULATIONS!
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