How to buy a franchise
So this is it. You’ve decided to invest in a new business venture. You’re going to dig into your savings, spend your redundancy cheque or borrow some money from the bank. But a new start-up frightens you, and you feel a franchise offers the best blend of security and independence. Perhaps you’ve already identified a business sector. Maybe you’re still open-minded. But what you do know is that you’re absolutely ready to commit. Now you want to know how to buy a franchise business.
With more than 900 recognised business format franchises, there are industry sectors and operations to suit everyone. There are businesses for super sharp salespeople, and there are ventures for technical academics. There are franchises that can be set up on a modest budget, and others that require much deeper pockets or some help from the banks.
So where do you find out how to buy a franchise business?
Well, this is a good place to start. Reading articles like these costs nothing, and helps you form a better understanding of the franchise industry. But reading and dreaming from behind the safety of your computer screen can only tell you so much. It will help you understand how to buy a franchise business, but it won’t buy it for you. So, once you’ve compiled your questions, your checklist and worked out what it is you really want, you need to start talking to people.
How to buy a franchise business – and how to sell yourself
When you tick a box on a website, you’ll receive plenty of emails in return. Your phone will start ringing at all hours and the postman will become busier for a few weeks. And that’s because those franchisors you’ve contacted – who are all serious about their businesses – will treat your enquiry just as seriously.
So what should you expect from those follow up phonecalls?
In most cases it will be a mixture of sales and selection. Franchisors want to promote their business, capture your interest and secure a face-to-face meeting. They also want to exclude any dreamers, timewasters and troublemakers.
And you should adopt a similar approach. You’ll need to ‘sell’ yourself and ‘select’ the right opportunity for you. Especially if you want to know how to buy a franchise business that:
- will give you the income and lifestyle you want
- provides the training and support you’d expect
- you can build into an asset to sell or pass on
How to buy a franchise business that you really want to own
The best franchisors will let you know that this is a two-way vetting exercise. You want to invest your money and efforts wisely and the franchisor is exactly the same. If they’ve set up their business to prosper from the success of their franchisees, then they’ll want to recruit the best candidates.
So, if you’ve found a business that you want to be a part of, you need to treat this like the most important job interview you’ll ever have.
Present yourself in the best way possible. Turn up looking smart and on time. Do your research, have lots of questions ready and listen to the answers. Expect to be questioned in return, and be prepared to provide detailed answers.
Amongst many things, a franchisor will want to know:
- Why do you want to join my brand?
- What will you bring to my brand?
- How hard are you prepared to work?
- Do you have the support of your family?
- How are you going to finance this?
- Are you self-disciplined?
- Can you follow a model?
Of course, this isn’t a job interview – it’s much more than that.
You’re deciding whether you want to enter into a business partnership. You’re considering parting with large sums of money, and committing yourself to several long-term contractual obligations. The decisions you make in this process will shape your life. The franchisor is deciding whether they want to enter into a business partnership as well. Good franchisors don’t accept just anyone, as they’ve invested large sums of money into resources to help franchisees just like you. The decisions they make will shape their business and affect its reputation.
How to buy a franchise business with the proper due diligence
Due diligence starts from the moment you first think about buying a franchise. But the detailed assessments begin once you’ve met the franchisor.
There are lots of questions to ask, and checks you need to make throughout the process. Some of these are legal – like reading through the franchise agreement (more advice on this here) and, if necessary, taking professional advice. Others are operational, like finding out how much support you can expect, and what your daily tasks will involve. Of course, you’ll need to dig deep into the financial aspects, both in terms of total investment and returns. But probably the most important element in your due diligence is speaking to some franchisees – and not just the franchisor’s favourites.
Once you are satisfied – and the franchisor is keen to accept your application – the final step is to hand over some money and sign up to the franchise agreement. And that will be emotional.
Naturally you’ll experience a mix of excitement and fear. But remember, if you are joining a franchisor with a proven track record – one that has been transparent and has plenty of successful franchisees – then you’ve probably made the right decision.
Investing in a franchise is a big commitment; at least five years with most franchisors. It’s not a job, and you can’t just walk away if it doesn’t work out.
You need to make sure you make the right decision. So hopefully articles like this, and others in the series, will help you understand how to buy a franchise business – and buy the right business for you.
For more information on how to buy a franchise business – from home-based opportunities to global mega-brands – visit DaltonsBusiness.com today.