How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
When you are serious about buying a franchise in Canada, you will have to have an interview with the franchisor you're considering before you're able to sign on. As with any other interview, you can't walk into this unprepared without risking losing your chance at the opportunity. At the same time, you'll be arming yourself with the knowledge you need to make the most informed decision possible.
Know the industry's challenges
It's not enough to be familiar with the general aspects of the brand's industry. You'll also need to know the challenges franchisees face in it, along with the other problems in that industry in general. You do not need to have all the answers to those issues, but you will have to convey to the franchisor that you are aware of these problems.
Read the entire Franchise Disclosure Document (FDD)
You should receive a copy of the FDD from the franchisor after you've submitted your application. Once you have it, you need to read it carefully. Don't assume you can skim it or just get the bullet points from a website. You need to fully understand this document before you go to the interview or sign any agreements with the franchisor.
Analyze your finances
Financing options are a little different for franchises than they are for business startups, so it is wise to look at your personal finances. Ideally, you should have more than you need to cover the business expenses. Try to double-check your numbers before you meet with the franchisor for your interview. You want to demonstrate that you can handle the investment and the operational expenses of the franchise in the early stages without struggling.
Speak to a legal professional
Even though you may feel comfortable with all the meetings you've had and the research you've done so far, it's not a bad idea to work with an experienced legal professional before you sign the agreement. They can help clarify things you are not sure of and answer any questions and concerns you may have. The key is to get legal advice before you sign any sort of agreement, so you will have the chance to walk away if necessary.
The franchisor interview is a big step for any prospective franchisee. Make sure you are as prepared and informed as possible before you walk through that door.
