How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
There is one crucial step aspiring franchisees should take before they sign a Franchise Agreement: visit one or more of the franchise's existing locations in person.
You may feel as though you already know everything there is to know about the franchise you're thinking of joining. Perhaps you're a loyal customer looking to take the leap into business ownership, or maybe you are an established entrepreneur and see a viable business opportunity. Whatever the reason for your confidence, do not discount the value of site visits.
The top reason for visiting existing franchise locations is to truly understand how the franchise operates. You may be familiar with your local branch, but look further afield and see how busy the location is. Talk to its owner to learn more about its economics and operations. Is the concept equally successful across all branches, or does success depend largely on area - and if so, is your planned area truly suitable?
Book your visit in advance if you want to make the most of your trip, and take the time to talk to the franchisee in charge of the operation. Ask about the realities of running the business, the challenges that the franchisee faces, and the support that the franchisor provides.
Ask about cash flow, inventory availability and ordering, and the training that is available. Find out how the franchisee markets their business and what a typical day in their life entails. It is very important, particularly if you want the franchise to work around another job or personal commitments, to understand the effort that is required to make a success of the business.
Ask about performance indicators and how profitable the enterprise is after costs and royalties to determine whether the opportunity is really right for you. If joining a community is important to you, find out what measures exist for collaboration between franchisees and what feedback mechanisms exist to share ideas, feedback, ways of working, and performance improvements.
Consider visiting existing franchise locations for field research, and make it a priority when you are considering joining a franchise. Effort expended prior to signing a Franchise Agreement is never wasted. At best, it will solidify your decision to join a particular franchise and help you to establish a supportive network from the outset. There is also a possibility that you will determine that the particular franchise is not as well suited to your availability, interests or experience as first thought, which could save you significant time and effort downstream.
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