Buying a Franchise: 3 Common mistakes to avoid
Joel Caws - Technical Director, Select Your Franchise
Its clear that franchising can be a great way to start up a business, however, you can find online alot of horror stories about people losing money, their franchise business failing, etc. Obviously there are no guarantees but with some careful consideration and research, you can minimise the possibility of failure as much as possible and do your best to ensure your franchise opportunity is a success. There seem to be several commonly recurring issues so heres a few ways to avoid them:
Mistake 1: Not checking the authenticity of the Franchisor
I’ve come across postings online where it appears that people have thrown money at a downright scam!
Remember that you will likely be giving a substantial amount of cash to the franchisor as start-up ‘franchise fee’. In addition to this, you will be building a long term business relationship with them so its important to know as much about their background and history as possible. Online is a great place to search for the company and research its history. Its also worth checking the Directors backgrounds to see what other companies they have been, or still are, involved in. Other good sources of company information can be the Companies House website, talking to the franchise departments of the major high street banks and also specialist franchise consultants who might be able to give you some industry opinion on any franchise you are considering.
Mistake 2: Not speaking to those that are already doing the job!
If you are buying a product then the best reviews and recommendations come from friends and others who freely share their opinion on it. From this you can make a well informed decision of whether you will buy a product. The same is true for a franchise. You should obtain a list of a few franchisees from the franchisor as ‘references’. Make contact with them and if possible arrange to meet them to get a feel for what you would be doing. They are likely to be your best source of feedback on how supportive the franchisor is and how well the franchise business performs for them on a day to day basis.
Mistake 3: Assuming that a Franchise carries a guarantee!
There can be a feeling that because a business is a ‘franchise’ it is somehow a sure fire winner. The bottom line is that you will be the one who decides whether your business succeeds or fails. A franchise business is purely a business system that has been proven to make a profit if it is ‘worked’ correctly. The key here is the word ‘worked’. Like any other business, a franchise requires alot of hard work and commitment. Ensure you have complete backup and support of your family as it will require alot of time to build a successful business.
Tags: Buying a franchise, franchise business, franchise mistakes, franchise opportunities, joel caws
