Guiding Steps to Buying a New Franchise
Budding entrepreneurs who want to start a franchise business have to be very well informed, not only about how franchising works, but also about how they should go about buying one. With the different types of franchising opportunities available today, it is very important for new players to pick the right business so as to achieve enormous success.
Considering you’re financially ready to buy a franchise, here are the steps on how you go about it:
Pick the right franchising opportunity for you.
The very first step is to evaluate yourself and the things that you can do. Questions like: How much time can you devote to your franchise business? How much money are you willing to invest? What are your plans in operating the business? Do you know how the business works? Answer these questions so you’ll be guided with your decision.
Prepare the funds.
The ideal way to start a franchise, of course, is to use your own money to purchase it. However, there are other financing options available to new and existing entrepreneurs like you. Business loans and getting a mortgage on your house are just two of the common ways to acquire the funds to start the business. However, you must also realize that all businesses are risks. If you are mortgaging your home to start one, you have to create a fallback or a Plan B just in case things didn’t go out well.
Request for information direct from franchisors.
Create a shortlist of five franchises that you can possibly buy. The compare them together using the information obtained from handouts and brochures. Review all the data you have acquired and determine which one of them can provide you with the best deal in terms of initial cash outlay, territory, and incurring fees. That’s how you’ll find a business that can provide you with the best opportunity for growth and expansion.
Perform due diligence.
It is not enough that you base your decisions on handouts and brochures alone. You have to go out there and research. Find out how stable the company is and check their annual sales data if they are available to the public. You may also talk to existing franchise owners to know about their first-hand experience with the business.
Set up a meeting with the franchisor and if possible, request for a copy of the legal papers.
A visit to the franchisor is your last step in this buying guide. Study the Franchisor Disclosure Document and all other papers they are willing to release. While at the office, have a feel of how the company does its business. Ask all of your questions from the executive in front of you. Then make a run through of all documents so you can arrive at that final decision. Once you’re ready, legalize everything and prepare to run your business.
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