This is your day. The day you’ll be making your yes or no decision regarding the franchise opportunity or business opportunity you’ve been investigating. Are you ready?
Make Sure You’ve Done These 8 Things
1. Have you learned all you can about the franchise concept?
Have you talked to the people you need to talk to? What is the buzz on the street about the concept you’re looking into?
Go to websites like Yelp to see what’s being said be customers. You should also setup a Google Alert to track the brand.
2. Do you feel that all of your questions were answered by corporate?
The team at corporate wants to sell you a franchise. That’s fine. Everything starts with a sale.
Do you have any burning questions for corporate that you haven’t asked yet? Now’s the time. Don’t be shy. It’s your money and your livelihood we’re talking about. Ask!
3. Did you get enough real-life information from the franchisees you contacted - and hopefully visited?
By “real-life” information I mean do you have a good understanding of what it’s really going to be like to own a business? When you asked your questions, did you get clinical answers, or were the answers franchisees gave you heartfelt? If you need to, call a few franchisees back and ask more questions…the kind of questions that go deeper into the life of a business owner.
4. Did you attend an in-person Discovery Day at headquarters?
Attending a Discovery Day is super-important. Discovery Day events are reserved (or should be) for serious buyers only.
If you attended one, what were you able to learn? Did you meet the CEO or President of the company? Did you meet with franchise team members who you’ll be involved with on an ongoing basis? How did things “feel” at headquarters? Did the employees seem happy? Culture is really important. Make sure the company you decide to partner with has the type of culture you’re comfortable with. If you say “yes” and end up buying the franchise, know that you’re going into a long-term relationship. That’s why it’s crucial for you to be comfortable with the company culture. Make sure it “feels” right.
5. Did you look at a couple of different financing alternatives?
There’s more than one way to skin a cat. What finance options did you investigate?
The U.S. Small Business Administration (SBA) provides guarantees to banks that give out loans to small businesses, franchise businesses included. Another financing option is to use a portion of your retirement funds to launch a business. I’ve had clients of mine use this method for securing capital. And, just so you know, I’m actually comfortable with the idea, as long as it’s done in a low-risk way (not using all of your money) with a legitimate company that specializes in this type of financing and knows how to do the paperwork required, correctly.
6. Did you seek out and meet with qualified legal counsel?
In other words, did you hire a competent franchise attorney?
Today’s franchise attorneys stay up to date with the ever-changing laws on franchising. Before you sign your franchise agreement (contract) have a franchise attorney look it over-along with the FDD. It will be money well-spent.
7. Do you have money in place to live on for 6-12 months?
You already know what your total up-front investment will be. But, none of the numbers that the franchisor gives you include your everyday living expenses. You still have to pay your mortgage, car payments, utilities, and maybe some college expenses. It’s not like you’re going to have a salary at first. The first year or so of a franchise business startup can be tough. You shouldn’t expect to make much (if any) money. I’m not trying to shatter your dream of business ownership here. I just don’t want you to have any surprises.
8. Have you discussed a worst case scenario? What if your business fails? How much will you lose?
There’s no guarantee of success if you become the owner of a franchise. Having said that, no one ever thinks they’ll fail. I understand. But, what is the worse-case scenario, financially? What would happen if your business failed? If you sit down with an accountant who’s familiar with small business, he or she can lay out all different kinds of scenarios…positive ones and negative ones. The more you know going in the better off you’ll be.
“It is impossible to live without failing at something, unless you live so cautiously that you might have well not have lived at all, in which case you have failed by default.”
- J. K. Rowling
If you’ve done your homework, and have a great understanding of what it’s going to take to own a business…a business of your own, the decision you’re about to make can be made with confidence.
The Franchise King®, Joel Libava, is a franchise ownership advisor. He’s the author of Become a Franchise Owner! (Wiley Publishing) and owns and operates Franchise Business University. Joel contributes a blog post to Franchise Direct monthly.