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Franchising: Do’s and Don’t

If you are considering purchasing a franchise, be aware there are successful franchises, which are very popular and there are the run of the mill franchises. Both can be worth buying as a future for yourself and your family. The popular franchises are the most successful. They also are the most expensive to get into. But, having found your way in, you are usually set for life.

Having the money to buy your way into a popular franchise is only part of the entry condition.
Be aware that being choosy, about whom popular franchises let in, is part of the reason they are so successful.
If you are considering approaching a popular franchise with the view to becoming one of their franchisees, then consider this:

Do research. Talk to existing franchisees in your area.
Ask them for any tips on how to dress when being interviewed by the franchiser
Ask them about the system they work under.
Ask them if the franchise charges are over the top?
Ask them if they had their time over, would they do it again, or would they get a second franchise..

Ask about capitalisation. Having enough money going in, is imperative.
Ask yourself if you are the right type of person for this type of product. Be brutal.
If you are successful in the recruitment process, the franchiser will have a documented package/process for you to be assessed by.
Make it a mutual screening process. In other words it is a two way street.
You ask as many questions as you see fit. Don’t be intimidated just because they seem successful.

You and the franchise need to be a good fit. Be aware of the franchiser’s body language. It is a sure sign of whether or not they think you will be good for them.

Remember, applying for a franchise is a partnership in the future. It is not an application for a job. You may well be putting hundreds of thousands, or millions of dollars, or  into it.

If you are serious about the franchise and can afford it, consider hiring a business broker familiar with franchises. She/he will guide and protect you through the process. Look on this web site for a broker.

The not so popular franchise may well be for you:

They cost less. They are easier to get into.
Their induction process will be less selective.
The onus will be more on you to determine if you are suited and if it/you will succeed.

Studies have found that the most frequent reason for a franchisee to fail, is inadequate selection processes by the franchiser. Sometimes a small franchiser will use new franchisees as their growth model. If this is the case, be careful.

Ask your self if you are really prepared for this.

Do you have a buffer in your capital?

Ask the franchiser if they have a self-assessment questionnaire.

Be honest with the franchiser about you current financial position. He is looking after his best interests by asking you about your bank balance. Don’t exaggerate about being able to put your hands on more money.

Keep family and friends out of the equation. This is your major step. If you can’t do it alone, don’t attempt it.

Be honest with the franchiser with every question he asks.

If he asks questions you don’t like, consider walking away.

Whether going for a popular or smaller franchise. Fill in all the forms carefully and honestly. Don’t fudge.

Ask, if you don’t understand about the procedures involved. Theses are usually non negotiable so be prepared to accept them as your new rules of doing business.

Do not rush into any hard sell by the franchiser, or any sense of obligation because they have spent so much time with you. This is long-term commitment on behalf of both parties.

If you have any doubts, either get professional help, eg. A broker, or do more research until those doubts are satisfied.

If after the recruitment process you are successful. Take a few days to consider. Let your emotions cool down. This is a major step. So be sure.

 

Good luck


April 1, 2012
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