When you’re buying into a franchise you’re heading into a long-term business relationship. That’s why you need to find out everything you can about the people you are going into business with.
Before you buy a franchise, there are important steps you need to take to ensure that the franchise is right for you. The franchise needs to be in good shape, offer the right level of assistance to you and align with your personal and professional goals.
So, before you rush out and buy into a franchise, take the following steps first.
Step 1 – Find out everything you can about the industry the franchise is in
To achieve real success in a franchise, make sure that you understand the industry in which the franchise operates. Find out how many similar franchises there are in the industry and if it is right for you.
It is also a good idea to choose a franchise in an industry that you understand or that you are passionate about. If you enjoy education, look at opportunities in that industry. If not turn your sights to franchises in an industry that plays to your personal and professional strengths.
Step 2 – Research the franchisor before you sign
There’s no point in buying into a franchise if you don’t like the people or if identify with the brand. The best way to find out if the franchisor treats its franchisees with respect is to call up some franchise owners and gauge their satisfaction of the franchisor. Ask the franchisees if the franchisor keeps to its promises and how much support and assistance they offer.
It is also a good idea to extend you research into the media. Check for any news on the franchise in the business and financial media. You might be surprised at what you find. Finally, make sure the franchisor is a member of the Franchise Association of South Africa.
Step 3 – Find the right franchise at the right price
One of the most important things you need to check is whether you can afford the franchise. There is no point in applying for a franchise, if you don’t have enough money for it. This will only waste your time and lead to disappointment. Make sure you understand all the costs involved in buying the franchise.
Now that you understand all the costs involved, you need to assess whether you’re getting what you paid for. Do your due diligence and market research. Speak to an accountant to confirm your calculations.
Step 4 – Find a lawyer you can trust
Remember, this is a business deal. You must ensure that you get the best deal possible. You’re entering into a legal contract. You will need a lawyer to check that you are getting the fairest deal possible. The franchise agreement given to you buy the franchisor must be fair to you and the franchisor. It is also a good idea to brush up on your rights in terms of the Consumer Protection Act.
Step 5 – Don’t be afraid to say no the franchise agreement
If at any point in the process you feel uncomfortable or unfairly treated by the franchisor, don’t be afraid to voice your opinion and even say no. Buying into a franchise is a decision that you can’t take lightly. You have a right to negotiate terms. If the franchisor rushes you to make a decision, this should raise a red flag.
Remember, you want to give yourself the best chance at success. So when you are looking into the viability of a franchise, take these steps and make sure that you get the best deal possible.
By Aiden Sookdin, Chief Communicator, BizWrite