Earlier this week, we addressed the serious matter of purchasing a franchise and included a practical checklist for you to complete before reaching for your wallet.
Once you’ve COMPLETED this checklist and further notice overall weakness in your answers, we highly recommend that you go back to step 1 and re-do the work.
If, on the other hand, you have made the educated decision that you’re ready to purchase one, Congratulations! Prompting individuals across America to reflect on their careers, many have realized their desire to become their own boss-especially in today’s booming economy. Whether you are a current business owner or not, purchasing a franchise provides you a powerful business model with effective strategies and an even clearer path towards success.
It enables you to hit the ground running.
While this momentous decision certainly deserves to be celebrated, recognize the cruciality of your decisions moving forward. Recent research exhibits some daunting statistics-with around 20% of new businesses failing in their first year, and 60% going failing in their first three years.
However, if you’ve properly completed your homework in preparation for a rollercoaster journey, you can move forward with a significant advantage.. Unsurprisingly, poor planning, off-target location, and weak market analysis prevail as reasons start up franchises fail. Furthermore, unprecedented events -such as Covid-19- emphasize the importance in maintaining an adequate financial safety net and resources to withstand the unpredicted costs the -or the company will inevitably fail.
Even with meticulous planning, there is never a “no-risk” option..
And while tremendous opportunity awaits in today’s world, substantial competition accompanies it.
This emphasizes the need to move forward with tenacity and a strategic approach
Advantageously, you will receive a ton of guidance from your prospective franchisor-should you understand the agreement of your purchase-you’ll receive ongoing support, marketing and training to grow your business.
Below, we will walk you through the typical process in purchasing a franchise…
Here, the franchisor and the potential franchisee get to know each other while analyzing brand overview- including the history, the mission, and the values .
In this stage, the goal is to create a relationship between the two parties. Determine if you shared interest in working together and accomplishing the objective and goals you establish.
2. Review Insight
This state dives deeper into the business; you will sign a FDD, learn about the franchise system’s financials and details around your investment and start-up costs. The FDD provides insights into the nature of the relationship the franchisee will have with the franchisor and outlines the Franchise Agreement.
We recommend that you have an attorney present to walk you through this lengthy document. This way, you can thoroughly understand what the franchisee expects from you.
3. Analyze Business Characteristics
Here, you will learn how to successfully build the business with unique demographics, target markets, location suggestions, and assistance with other aspects of the business provided by the franchise.
Furthermore, you will receive support from the sales team throughout.
Next in the franchise sales process is hearing testimonials from former and current franchisees. It’s highly recommended that each franchise candidate contact other franchise owners to transparently discuss their experiences. Here, you will learn about the company culture and see through other perspectives.
Collecting feedback from other franchisees is essential before signing a franchise agreement.
5. Franchise Discovery Day
At this point, you and the franchisor will know if you will make a good team. Usually held at the franchisors corporate office, the Franchise Discovery Day is a perfect opportunity for you to learn more about the operations and ask questions. By the end of this event, you will most likely have enough information to make an informed decision. If you are confident with the opportunity, you can close by signing the franchise agreement.
Understand that depending on the franchise you are buying, these steps may vary.
By now, you should realize that buying a franchise is a big deal, and if you’re not properly equipped as you enter the process, you will more than likely find yourself bound to an agreement that you can’t handle.
To help you through this lengthy process, you may want to hire a seasoned consultant to evaluate if the opportunity is right for you. With previous experience guiding others to a favorable position, our team at MCDA CCG, INC. will gladly act as your viable resource. Located in Placentia, Orange County, California, our experts will provide you with ongoing guidance as you review franchise related terms, assess the business, and ultimately decide to sign the agreement. Take action by first contacting us today!