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 As a franchise
sales consultant I am often asked what is the general process or
basic steps of finding the right franchise business to buy. Below
is a simple (and very general list) of some the major and general steps
about how to buy a
franchise business today.
Review Your Financial Situation: In my opinion there is no
sense in starting a search for a franchise to buy and start if you
don’t have adequate funds to qualify for it and make the initial
transaction happen. Keep in mind that even if you intend to seek
bank or SBA financing you are still going to need to come up with
at least 15 to 20% to put down. It would also be wise to review
your credit rating as all lenders and most franchisers will check
this as part of their own due diligence and qualification process.
And finally although most franchisers and lenders are going to
require or suggest you have adequate working capital available to
get you through the start up phase you might want to make sure you
have an extra cash cushion in case it takes a little longer to
achieve profitability.
The Right Franchise For You: Most prospective franchise
buyers already generally have an idea about the type of franchise
business they want to start whether its a restaurant or a
senior care
business. I always encourage entrepreneurs to seek opportunities
that they have a genuine interest and passion about. This is
crucial in my opinion because starting any small business these
days is not easy and requires a lot of consistent focus, energy,
and sacrifice on multiple levels to succeed. So when it comes to
starting a franchise I would say the old adage of about “following
your bliss” is a good guideline to keep in mind. Note: If you are
not sure which direction or business category is right for you can
request a free and no obligation
franchise buyer consultation
here.
Find A Franchise: The advent of the Internet has made
researching and finding a franchise to buy very convenient these
days. There
are now literally dozens of franchise opportunities directories
online today like
Premierfranchises.com that offer comprehensive listings of
franchises broken down by popular franchising categories like
automotive, fast food,
health
care, home based, financial services, and more. On these directories you can also
review initial summary profiles about multiple franchise business
concepts quickly including information about investment levels,
training, availability, and how to contact the franchiser for more
details.
Franchise Due Diligence: This is the most important part of
the process of buying any franchise business and should not be
taken lightly. After you have received more details about a
franchise you have a high level of interest in the next step is
generally you will have an initial conversation (if you haven’t
already) with a representative of the franchiser who will then
forward you an application to complete if you are still interested
and you appear to meet their qualification guidelines. After you
have completed and submitted the application by law you should
receive a copy of the Franchisers Franchise Disclosure Document
(also known as the FDD) at least 14 days before you are asked to
sign any agreement or pay any fees to the franchiser. Read and
review this document very carefully and record notes and questions
you want to ask the Franchiser to comment and clarify on. This is
highly detailed and important disclosure document that covers
information about the franchisers background, financial history,
litigation, restrictions, training, terminations, current and
former franchise owners, and much more. It would be prudent and
advisable to consult with a franchise Attorney to review this
document as well before taking the next step of signing any actual
franchise agreement.
Sign A Franchise Agreement: After you have completed a
thorough examination of the franchiser’s offering and FDD, which
should have included speaking with several current franchisees who
can validate the concept, and may or may have included a discovery
day visit to the ranchisers corporate offices, the next general
step is to sign the actual franchise agreement which is legal and
binding contract. In my opinion to protect yourself and give you
piece of mind I would recommend a hiring an experienced
franchise Attorney to review any franchise agreement before
signing.
Note:
This information about how to buy a franchise opportunity is intended for research purposes only.
Always consult with your legal and financial advisers before
making any investment decision.
About
Author:
Ray Haiber has 12 years experience as a professional Business Broker and franchise sales consultant.
© 2011, Ray Haiber |
