01Choosing the Right Franchise
This is by far the most crucial step of the franchise-buying process. Deciding which franchise to buy is challenging since there are thousands to choose from. You should choose a franchise you have an interest in or an industry in which you have past experience. And 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. Know the warning signs that indicate a particular franchise opportunity may not be worth the risk.
02Deciding What Franchise You Can Afford
As you research franchise opportunities, ask a lot of questions and find out exactly what the overall investment will be. If a franchisor is advertising “$50,000 Initial Investment,” this does not mean that 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. But there are many other costs involved, including 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.
03Due Diligence on Your Selected Franchise
After 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 are also at the beginning of a (hopefully) long-lasting and rewarding 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 franchises on your own, and ask lots of question.
04Working with a Qualified Franchise Attorney
Anyone who is considering buying a franchise should consult with a franchise attorney - franchise law is highly specialized, and the average general business attorney will not be sufficiently qualified. Qualified legal counsel will help you to make sure you understand exactly what is expected of both you and the franchisor. You'll be reviewing all of the franchise documents with your franchise attorney, making sure that you understand all of the terms and documentation before signing the franchise agreement.
05Preparing Your Business Plan
Creating a business plan will not only help you receive financing for your franchise, it will also become your guideline for success. Another reason to create a business plan when buying a franchise is to set out your own personal goals from the investment. Any investment you make should be well 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.
Build Your Business Plan (SBA online tool)
Learn the Steps in Buying a Franchise
Here Are 5 Factors to Consider Before Investing
The process of buying a franchise is complex and should be pursued very carefully. There are many factors to consider and many steps to take during the franchise-buying process. The following 5 topics will help you better understand the franchise buying process.