You might not know how to buy franchise if this is the first time you ever bought a business. The process of buying a franchise can be quite overwhelming and very confusing. What this article is going to do for you is give you 4 rock-solid tips on how to buy a franchise.
For most entrepreneurs, the natural thought process is to just find a franchise that they are passionate about. I think that's a great idea however, if you buy a franchise solely on what you are passionate about you run the risk of making a critical mistake in buying the right franchise. These are 4 tips on how to buy a franchise right.
1. Get a reality check - Before you sign on the dotted line, take a step back and get a clear understanding of exactly what your current financial situation is. Make sure you know exactly how much money you have to invest and how much time you plan to spend on your business. What most rookie business owners do is they make the mistake of believing they are better off financially than they really are. It's important in business to not mix business with emotions.
2. Understand the FDD - The FDD, otherwise known as the Franchise Disclosure Document, will tell you everything that you need to know about the franchise you are thinking about buying. The FDD will tell you exactly everything the franchise company is responsible for and everything you as the franchise owner is responsible for. The FDD will also identify any former and current litigation against the franchise company. This is important to know when you are evaluating the strength and the character of the franchise. You have a 14 day window to go over the entire FDD and to analyze it from top to bottom. Use this time wisely to conduct your due diligence.
3. Consult with franchise experts - During your 14 day "cooling off" window, it is strongly recommended that you consult with franchise experts. They are there for your benefit. I highly recommend first consulting with a franchise attorney so they can help you determine if owning a franchise is right for you and your family. Next, I recommend sitting down with the franchising accountant so you completely understand all the tax and legal advantages and disadvantages of owning a franchise. Spending a little time and money now with these professionals will save you thousands of dollars in costly litigation fees in the future.
4. Alignment your current goals and values - After you have completed the first three steps, now it's time to tie it all together and to choose a franchise that is in alignment with your values and goals. If you can also choose a franchise that you're passionate about, even better. So if your dream is to spend more time with your family on nights and weekends, do not choose a franchise that requires you to physically be there on nights and weekends. Also, if your goal is to be home every night, don't choose a franchise with extensive travel requirements.
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