15 tips for buying a successful franchise
If you want to have a business of your own, but not necessarily start from scratch, buying a franchise can be an interesting option to consider. A franchise will allow you to get a business model that has worked elsewhere, and that comes with the operating and manuals for operation. The chances of success with this type of business are higher (but not 100% guaranteed), but their costs are too.
Remember that you must pay the rights of franchise, pay royalties for some time, in addition to other expenses of any business.
Before buying a franchise, there are 4 items you need:
- Money to invest in the purchase and implementation of the franchise
- 1 accounting consultant
- 1 Legal advisor
- 1 general manager
Now, we go with the tips:
1. Identify your skills and interests are related to the franchise?
If you have experience in any field, you can search for a franchise – related field. Not all franchises are fast food chains. There from fuel stations to educational institutions, through the television.
2. Believes that still have a boss
Although it will be business owners, franchises have strict rules and regulations you must meet.
3. Determine how much money you have to invest in buying the franchise
Some franchises may be out of reach due to costs of purchase rights. For example it is estimated that buying a McDonalds costs about a million dollars just right.
4. Choose a franchise that provides advice
Brand value is important, but should also consider consulting, training and support offered by the franchise, especially for difficult times. To ensure that this support will be real, you can ask other franchisees.
5. Find out about the success of the franchise
A franchise business must be lasting, not just a fad. There are many franchises that spread quickly but did not survive the change in the market.
6. Evaluate the financial model franchise
Do not trust the numbers that the franchisor gives you. Make your own detailed analysis of sales, cost of sales, general expenses and property and franchise rights. Determine how much to invest and how much you’ll take home at the end of the day. Check out the royalties, which range from 3 to 10 percent of gross income. If necessary, hire an accountant or financial advisor to help you in the task.
7. Ask what the expectations of the company
Some franchises require quick success translated into specific sales figures, while others give a greater margin of time to grow.
8. Hire a franchise lawyer
The lawyer will help you review the documents and negotiate an agreement with the franchisor. If the lawyer is an expert in franchising, you can ask if you have never heard anything negative business model you plan to buy.
9. Notes reports of the franchise
In this you can also help the lawyer. Search all the documentation to understand the real situation of the franchise. Detects whether litigation or legal problems with franchisees in other areas. These can be warning signs.
10. Put your financial affairs in order
Franchise owners also will be watching your financial status to know if you can meet the commitments.
11. Talk to other franchise owners
Locate franchisees who decided to terminate the contract with your chosen brand, and ask them about their reasons for leaving the business, or they did wrong in the way. Also, contact with employers who continue to maintain the contract with the franchise.
12. Find out about supplies and equipment you will need
Some franchises require you to buy almost all the equipment, while others offer these items within the overall payment. Make sure the rates will be reasonable and competitive.
13. Question coverage of payment of fees
Some franchises include training and advice for marketing in the payment of purchase rights, while others require an extra payment for these services, which to be honest, because there are necessary include successful business model. Little good to buy a successful brand if you do not know how to exploit it.
14. Find out about extra investments
Find out if they need additional capital investments in order to be profitable, or if the costs of implementation are the only major investment.
15. Hire a general manager
Hire a general manager or supervisor of operations with industry experience will help you have a better chance of success. If you have the necessary experience, you could perform the function, but remember that you must spend all day monitoring the operation of the business.