How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
When you sign up for your new Canadian franchise, it may seem like nothing can go wrong. After all, you've got the franchisor's support, a proven system and probably a brand that many people already know. However, despite all these advantages, you can still stall your new business by making one or more of the common mistakes people make when they first decide to join a franchise.
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Underestimating financial needs and overestimating capital
Many new franchisees believe they can access more cash than they actually can, and they also underestimate what they will need to keep their business going in the early days. Be prudent in your estimates, even if you have guidance from your franchisor. If you fail to be honest and accurate, you will be the one left holding the bag.
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Assuming success in a booming market
Your success is not guaranteed just because your market is booming and others are doing well. You are not your competition, and you don't have years of clients or experience in the field. Of course, it can work for you--your franchisor should not have approved you otherwise--but you will still need to find, earn and serve customers to keep them. The competitor already operating nearby has already accomplished this part. You can build your own client base or lure them away from the competition, but you're not guaranteed to get them. Remember that you will need to find a way to be better and/or different from your competitors to be successful.
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Low-balling rent instead of finding the right site
Location is a crucial factor for a retail franchise with a brick-and-motor presence. Easy-to-find sites that are convenient and have parking will draw in customers better than a store customers never see. Lease payments are going to be a significant overhead cost, of course, but a low rent does not offset the cost of opening in the wrong place.
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Patience is in short supply
Opening your business before you are ready due to impatience is an easy mistake to make. You need take the time to be thorough in all of your quality control, training and marketing plans. If you open your doors too soon or without enough preparation, you might lose customers when you appear unable to correct an issue or come off as if you don't have the required knowledge. First impressions matter, so wait until you are ready to make a good one!
The mistakes above generally come from a franchisee not being honest with themselves about finances, their abilities and what it will take to make their business grow. Judge whatever opportunity you decide to go with using an open mind and realistic expectations to avoid the common pitfalls of starting a new business.
