The process of buying a franchise is a very long process that should be pursued very carefully. There are many factors to consider, and many steps to take during the franchise-buying process. The following 5 stages will help you better understand the franchise buying process.
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This is by far the most crucial step of the franchise-buying process. Deciding which franchise to buy is very difficult since there are thousands to choose from. You should choose a franchise you have interest in, or choose an industry in which you have past experience. Also, you must choose a franchise that is financially right for you. Remember, this will be a life-changing experience, so make sure you make the right choice.
You must remember to ask a lot of questions and find out exactly what your overall investment is. If a franchisor is advertising “$50,000 Initial Investment,” this does not mean that this amount is all you are required to invest. This $50,000 will probably represent your down payment and possibly a part of your franchise fee. There are many other costs involved, including the franchise fee, legal fees, build-out costs, supplies and working capital. Get an overall list of the items that make up the total investment and make sure it is something you feel comfortable with.
Once you have decided on a franchise that fits your lifestyle and budget, the next step is to investigate the company. When you buy a franchise you are not only buying a system but you are also at the beginning of a (hopefully) long-lasting relationship. You want to make sure it is the right relationship. Take your time and investigate the company thoroughly. Meet with all of the top executives in the company. Track down existing franchisees on your own and ask lots of questions.
Anyone who is considering buying a franchise should consult with a franchise attorney. This will help you to make sure you understand exactly what is expected of both you and the franchisor. You will do this by reviewing all of the franchise documents with your franchise attorney. It is imperative that you understand all of the terms and all of the documentation up front.
If you are borrowing money to buy your franchise you will need a business plan. Creating a business plan will not only help you receive financing, it will also become your guideline for success. Another reason you need to create a business plan when buying a franchise is to set your own personal goals. Any investment you make should always be researched, well thought-out, and follow a certain structure. Creating a business plan will keep you on the right track and help you focus on achieving your goals.