10 Things I Know About…Buying a Franchise
Mark Dubinsky, President of Dunkin Donuts Independent Franchise Owners, (DDIFO), which represents more than 1,700 member franchisee owners in 12 states. He was also CEO of his family’s 27-unit franchised network of Dunkin’ Donuts shops. NEFA member, Dubinsky wrote in the Worcester Business Journal.
10. Do Your Homework
Work for an existing franchisee for at least three months to see if you are passionate about the business.
9. Philosophy Matters
Make sure you are comfortable with the franchisor’s management team, culture, strategies and tactics.
8. Fine Print
Read and understand every word of the franchise agreement and any other documents you will be required to execute.
7. Gather A Team Of Experts
Hire competent, experienced professionals to advise you.
6. Key Disclosures
Read and understand the Franchise Disclosure Document (FDD). For more information, check out this web site: http://www.ftc.gov/bcp/franchise/faq1.shtm.
5. Get References
Speak to at least 10 existing and 5 ex-franchisees about the pros and cons of being a franchisee.
4. Legal Reference
Understand the details and the quantity of any litigation between the franchisor and its franchisees.
3. Business Reference
Speak to the independent franchisee organization(s) (if any) and try to get any remaining questions answered.
2. Money In The Bank
Make sure you have sufficient capital to meet all of your current and future obligations.
1. Listen To Your Heart
Prospective franchisees must understand the business reasons why they should become a franchisee.
10 Costly Mistakes to Avoid When Buying A Franchise
Many people dream of being their own boss someday, but are afraid of the risks involved. We know that it is impossible to take all the risk out of going into business. In many cases franchising provides a way to minimize the risk, but it can never remove all of it.
Franchising methods can be quite complicated, and certainly anyone looking into a franchise quickly learns that there are a large number of factors to be considered.
Again and again, I’ve seen people ignore the important warning signs and make Costly Mistakes when buying a franchise. They fall into the same traps that have victimized others before them. As they say, what we don’t learn from history, we are doomed to repeat!
I have compiled a list of “10 Costly Mistakes to Avoid When Buying a Franchise”, you can get a FREE Copy emailed to you at: Franchise Perfection
Costly Mistake #9 Not writing a business plan.
An essential part of any franchise business is its plan for success. The word “plan” comes from the Latin planum, meaning to lay a foundation or groundwork. Your business plan lays the foundation for your new franchise.
Formulating a strategic business plan for your franchise is the first step to success.
Remember the famous saying: “Always plan ahead. It wasn’t raining when Noah built the ark.” The discipline of developing a franchise business plan lets you look at the challenges ahead and your expectations for your new business. This involves looking at your business ideas and financial needs as well as your marketing and management plans.
One of the advantages in developing a franchise business plan is that a good deal of the information is provided by the franchisor. Much of the financial information is available in the UFOC.
Make sure you consider your strategy for investing, including the entry strategy, a long-term strategy, and an exit strategy. Does the business fit your personal strategy for growth and success?
There are no guarantees that your plans will actually play out. But making the effort to think about and develop a business plan puts you in the driver’s seat. You will have thought through almost all of the potential issues and either revised your plan or outlined contingencies. You will also have a clear idea of the costs and benefits involved, including the costs of not proceeding.
Simply put, many people do not take the time to really understand what they’re trying to achieve when they invest in a business, and consequently, they are never satisfied with the results.
When you’re planning, be conservative. If there are going to be surprises, let them be pleasant ones.
If you know in your heart that you can do what it takes to make a business succeed no matter how challenging it is, then you are well on your way towards success.
To see the complete list of: “10 Costly Mistakes to Avoid When Buying a Franchise” click here!
Jim Coen, Mr. Franchise
I have learned franchising from the ground up. I’ve been a franchisee for a bad franchisor. I’ve worked for good franchisors and I’ve worked for marginal franchisors. I’ve helped many franchisees succeed.
I provide a consulting process that saves you time and money in your franchise search and provides you with the tools to make the right choice for you and your family.
Call: 617-469-3002
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