George Cohon, renowned businessman and founder of...
Buying a franchise can be a good way to get your start as a business owner. Franchises come with a lot of built-in advantages, such as name recognition and training support. However, before taking the plunge, there are some steps you should follow.
Before thinking about buying a franchise you need to figure out what you want to do and what opportunities are out there. You need to match up a franchise business with your skills and interests. For example, if you have no background in food service, you probably don't want to buy a restaurant franchise.
Talking with a franchise expert as well as other franchisees can give you an idea of what you are getting yourself into. These sources can give you an idea about the franchise business in general, as well as specific information about certain franchises.
Once you have a good idea of what kind of franchise business you might want to buy, you need to do some research on your own. Explore the websites of the franchise companies to get as much information about them as you can. Also research third-party sources, such as news reports and customer reviews, for more information.
After you have narrowed down your choices, contact the prospective franchise companies you are considering. Request basic franchise information, such as financial requirements and also ask for a franchise disclosure document.
Whether the franchiser you choose requires one or not, there are many reasons to have a detailed plan. For one thing, any potential lender will want to see a business plan and having one can also help you keep focused on your business goals. Your business plan should include a cash-flow projection as well as a profit and loss forecast.
Most franchises are going to require financing and even if you have cash on hand to self-finance, you may not want to put that much of your own personal wealth into a first-time business venture. Make sure your business plan addresses specific points that lenders are going to care about, such as how long it's going to be before you are profitable.
It's a good idea to find a lawyer who is experienced in franchising. They can help you navigate the process and also advise you on whether the fees, royalties, franchise territory and other aspects are standard for the market.
Once you are ready to buy into your chosen franchise, your lawyer can help walk you through the process. Take a deep breath and jump in with both feet..you can do this!
Congratulations on taking the first step towards being a business owner. It may appear like you have a long road ahead of you but let me assure you its all worth it in the end!