List Headline Image
Updated by Joel Libava on Mar 07, 2016
Headline for Top 10 tips for buying a franchise in 2016
 REPORT
Joel Libava Joel Libava
Owner
10 items   2 followers   1 votes   43 views

Top 10 tips for buying a franchise in 2016

With 3,000+ different franchise opportunities to choose from, it’s important to be able to manage the process of looking for a franchise business that makes sense for you. The tips below by The Franchise King can serve as your road map. All you have to do is follow along!

Source: https://www.thefranchiseking.com/ten_tips

1

Start the franchise exploration process by looking at what the business skills are that you bring to the table.

Start the franchise exploration process by looking at what the business skills are that you bring to the table.

Are you great at sales? Marketing? Or are you better at operations and/or management?

Personalize things as much as possible. You are unique. match your unique skills and even your dominant personal traits to franchise opportunities that can best utilize them.

2

Are you comfortable using someone else’s systems and procedures? I hope so.

Are you comfortable using someone else’s systems and procedures? I hope so.

In franchising, you’re purchasing a license. This license gives you the right to use the franchisor’s proprietary business system. Don’t invest in a franchise, if you don’t intend to use the system.

The system includes rules…lots of them. And, certain procedures you must follow as a franchisee.

How are you with rules? Do you follow them? Will you follow them as a franchisee?

Are you sure?

Idea: Take the Free Franchise Quiz I developed several years ago. I’ll personally score it for you. It’s usually spot-on when it comes to determining if you’re right for franchising…if you’ll actually follow the rules.

Go here to take the quiz.

3

Do you have the complete support of your family?

Do you have the complete support of your family?

Starting any type of business-franchise business or not, needs to be a family decision. Family members must understand that there will be serious demands on your time, and that they’ll need to be supportive of your decision. And, let’s not forget The Money. It’s possible* they’ll be nervous about losing the money you’re thinking of investing in the franchise business.

*Correction: They will be nervous! Especially since they don’t know half as much as you do about the franchise you’re thinking of buying.

You may want to read my article, Buying a Franchise-Fighting About Money

4

Before you even think of seriously looking into franchise opportunities, you need to do a net worth statement.

Before you even think of seriously looking into franchise opportunities, you need to do a net worth statement.

To do that, just subtract all your liabilities from your assets. The difference between the two is your net worth. And, not only do you need to do this for your own purposes…to set a budget for example, the franchise sales representatives you talk with will be asking you for it.

Use My Free Net Worth Calculator

5

When you find some franchise opportunities that interest you, talk to as many franchise owners as possible.

When you find some franchise opportunities that interest you, talk to as many franchise owners as possible.

Ask them lots of questions. Like this one. And, make sure you spend a day with one or two existing franchisees.

Read, Franchise Research Tip: Spend A Day With A Franchisee, for tips on how to make this day super-valuable for you.

6

Don’t rush the research process.

Don’t rush the research process.

Be thorough, and talk to both happy and unhappy franchisees. Be willing to discuss what you hear with the franchise company’s sales representative. See how they react to your questions.

Read, My Top Franchise Research Tips And Techniques

Bonus Tip: This is a good time to start putting together your franchise business plan. Here’s why:

  • You’re going to want to put some financial projections together. Doing so will help you figure out your break-even point…and a lot more.
  • It’s almost impossible to get approved for a franchise loan without a business plan.

Use The #1 Selling Business Planning Software In The World

7

Read through the entire Franchise Disclosure Document (FDD). Then read it again.

Read through the entire Franchise Disclosure Document (FDD). Then read it again.

The FDD is the required legal document that will be sent to you by the franchise company electronically and/or via regular mail. Write questions down as you go, (you are free to mark the document up if you want) and be prepared to ask the questions you have to the franchise company representative.

Don’t freak yourself out over some of the things you may see in the FDD.

In other words, unless you happen to be a franchise attorney who’s buying a franchise, leave the things you’re most concerned about to the franchise attorney* you hire.

*You’re going to have to hire a franchise attorney. It’s money well-spend, believe me.

You need to read this article about the importance of hiring one.

Then, read this article I wrote for the U.S. Small Business Administration, so you can find out what’s included in the FDD.

Bonus Tip: You need to start the process of applying for a franchise loan-a small business loan.

It’s Free For You To Apply For A Loan Here

8

When you have narrowed your search down to one franchise opportunity, plan on investing a little money to visit the f...

When you have narrowed your search down to one franchise opportunity, plan on investing a little money to visit the f...

There’s actually a name for this visit; Discovery Day. It’s the day you visit headquarters and meet the executive and support team in person. These people may end up becoming your business partners.

That’s right: Franchising is a partnership…maybe not in the legal sense, but you are partners.

Go here to find out what to expect at Discovery Day, and to find out when the right time for you to go to one.

9

When you get back from your headquarters visit, you need to go back through your notes.

When you get back from your headquarters visit, you need to go back through your notes.

You’re going to want to see if there’s anything you missed. If not, it’s time for you to hire a franchise attorney to look over the FDD and the franchise agreement. The attorney should point out the things you need to know and point out what, if anything, you may have missed.

*Bonus Tip: *You should also hire a CPA (Certified Public Accountant) to help you with the numbers. A CPA can also help you decide on a business structure for your company, if you decide to move forward.

You can use my friends over at CorpNet; they’ll help you Incorporate or Form an LLC in minutes.

10

It’s decision time.

It’s decision time.

DD-Decision Day is what I like to call it. Ask yourself this:

Does the franchise opportunity “feel” right?

If, after doing great research, the franchise you’ve been thinking of buying feels like “The One,” move forward.

If something just doesn’t feel right…I’m not referring to the anxiety you’re probably having…this is a big decision, don’t do it. Period. There will be other opportunities.