Franchise Direct's Kevin Sullivan has written a guest post explaining 15 things that every entrepreneur should do before buying a franchise.
- Talk to your family and friends. Make sure the most important people in your life are behind you 100%.
- Research everything on franchises and decide what industry is right for you.
- Do you have enough money? Make sure to account for all costs like franchise fees, equipment, supplier costs, etc. Most franchisers expect 20% of the costs upfront in cash.
- If not, where else can you get the money? Make sure you have a Plan B, and a Plan C, and a Plan D like friends, family, banks, an investor, or a second mortgage on your house.
- Lease equipment rather than buying. Make sure you think, “What if this does not work out? What will I do with all of this stuff?” Leasing will be cheaper and be less of a burden on your balance sheet in the beginning.
- Are you ready for the time commitment?
- Do you have the desire, skill, and will-power to manage your employees? Make sure you can be a good boss and be able to manage your employees well.
- Seek advice from lawyers, accountants, and independent franchise services. Make sure you find out what professionals think about your decision to get a franchise.
- Ask questions about the franchise to other franchise owners and managers. Make sure you get advice and opinions from people that went through the same process you are about to.
- Ask questions to the franchisor! Make sure you get all of your questions answered before you make this decision.
- Have the 4 C's – Credit, Collateral, Character, and Cash. Make sure you bring all four of these to the bank and your loan process will go a lot smoother.
- Search for the bank that gives you the best deal. Make sure you do not just go with the first bank you stop in to. A little research can save you thousands of dollars in the long run.
- Know and understand the purchase contract.
- Be realistic. Make sure you set obtainable goals and not far-fetched ones.
- Think it over, take your time. Make sure you put a lot of time into this decision.
Kevin Sullivan is from Buffalo, NY and will be a senior at SUNY Oswego in upstate New York. He is a Business Administration major with an International Business minor. Kevin is the president of SUNY Oswego SIFE and wants to get into management when he graduates from Oswego. Kevin is also very involved in the community and many programs in the School of Business like being a Peer Advisor for incoming freshman and being a teaching assistant for a management class for the past three years. He is a die-hard Buffalo Bills and Buffalo Sabres fan and cannot wait for the day that either of them finally win a championship.