7 Tips For Starting A Business Franchise
May 21st, 2010 | Author: admin
Starting a franchise is one of the easier ways to get into the entrepreneurial world. By getting a franchise, you immediately have name recognition, cooperative marketing, bulk purchasing power, and training and management expertise. These are advantages that solo entrepreneurs would only be able to enjoy after years of hard work.
Although franchising is an easy way to set up your own business, it also has its drawbacks. You really have to look at the fine print of the agreements that are drawn up between the franchiser and the franchisee. Some of these agreements can have very rigid rules. Here are some helpful tips that can help you on your way to starting your own business franchise.
Investigate all of your opportunities first. You may want to visit a franchise trade show or start by contacting an agent of the franchise that you are interested in. You may also want to interview a few franchise owners and ask about their past experiences with setting up their business.
Talk to franchisees of the business you are interested in. Are they happy with their choice? How well is their business doing? Try to ask a few questions regarding the franchiser as well and find out how responsive they are.
Do your homework. Try to find out as much information as you can about the franchiser. Do they offer you exclusive territory for the length of the franchise? Do they provide financing? What are the required franchise fees? Do you have the right of first refusal to adjacent areas? How long have they been in business? Are you allowed to terminate operations before the actual end of the contract?
Develop a plan. There’s a big difference between a traditional start-up business plan and a start-up franchise plan. The start-up franchise plan must combine components of both the franchisee and the franchiser. In effect, you’re merging elements from both companies. You may also want to calculate your franchise expenses.
Understand the franchise agreements. Consult with lawyers or franchise consultants about the agreement before you sign anything. Have a trusted accountant review any of the audited fiscal statements that the franchiser presents to you.
Read through the UFOC (Uniform Franchise Offering Circular) very carefully. This is supposed to be sent to you the moment you express some interest in the business. It provides detailed information about business costs, current franchisees, and other such information. It also discloses any and all criminal, civil or administrative litigation that may be either completed or still pending against this franchiser. This involves any allegations of misrepresentation or fraud that you should be aware of. The UFOC is provided by law to all prospective franchisees. Verify the facts stated in the document and confirm them before going any further. It is also a wise move to have a background check completed on this franchise as well as employees of the franchise to gain a better knowledge of their history and their experience.
Determine how you’re going to manage the business. Some franchisers already have a tried and tested methodology on how the business should be managed. If you are given free range on how to manage your franchise, you may want to enroll in a franchise management seminar. You may also want to take a page or two from the management successes of other franchisees.
Even though you are banking on an already established name, getting into a franchise is still risky business. By getting all of the proper information together first, you should be able to make a well educated decision on your possible future investment.
