Steps to Buying a FranchiseHow does the whole process of buying a franchise go - from choosing the business to signing documents March 27, 2017
Running your own business is an opportunity that a lot of people see as good but they never pursue it. Be the one that You probably are someone who considers buying a franchise since you’re reading this article. You know your strengths, you’ve prepared yourself mentally and you know you can do it. You might have even set eyes on a particular business. The question now is – Where should you begin?
Steps to buying a franchise:
- Choose the right business for you
- Research the franchising company
- Organise a meetup with the franchisor
- Discuss the extra details – Costs and benefits
- Calculate your costs
- Weight in the benefits and make a decision
- Sign the contract
- Hire people to join your team
- Go through training sessions
Step 1 – Choose the right business for you
Without saying, you have to do a bit of research before making any kind of investment. Ask yourself the following questions:
- How big is the demand of the business/industry you chose?
- Is this niche growing? (Or in other words: Does it this business have a future?)
- Are there thriving companies in this niche, which sell franchises?
The first thing you have to remember is – a business exists to serve people’s needs. If there is no demand for a service or a product, however great the idea may sound to you, it won’t be profitable.
Beware of fads. This is the kind of business, that’s here one day and gone in the next. Franchises of this kind won’t survive. The best thing to do is to invest into something, that never goes out of style, like home maintenance services, restaurants, etc.
Now, that you know what you should be looking for, the search begins. Look for companies, that sell franchises in your area and follow the above criteria.
Step 2 – Research the franchising company
The more you know about what the company does, the better. Read guides and what they promise their clients. If you can think you can manage it – great! That’s one step further the right path. If you’re able to contact existing franchisees – do so. It will prepare you and keep your expectations realistic. This way you can evaluate if it’s all worth it.
NB! Keep in mind it’s not necessary for you to experience the same downfalls like some of the people you’ll speak to. Everybody is different and some are just not suitable to be good franchisees. More about that you can read in our blog post Franchisees VS Entrepreneurs.
Step 3 – Organise a meetup with the franchisor
After you made up your mind which company you want to work with, you should contact them. Usually, you can find the information you need on their website. There are different ways to do that – by telephone, by online quoting/booking form or by e-mail. It all depends on your preferences.
One of the best practices is using the quoting form, as it can improve the communication between you and the business. There you enter your questions, what you’re looking for and your contact details. You can also point to the most appropriate time for the business to reach you.
The company then will evaluate your request. In the best case scenario, when they contact you back, you’ll arrange a meetup.
Step 4 – Discuss the extra details – Costs and benefits
The meeting itself can be face-to-face or over a video call. Either way, you will have the opportunity to discuss your business opportunity. Ask all the questions you have and get into details. Then you will get a personalised offer, matching your skills, requirements and investment.
Step 5 – Calculate your costs
After the meeting take your time to calculate if the business proposal suits you. Some offers seem cheaper at first sight because their up-front payment is lower than the rest, but this is exactly the type of business, that will most likely have ongoing monthly taxes. This might or might not suit your pocket. Other companies require only upfront payment, which will be higher than the others, but at least you won’t suffer from hidden taxes and fees.
If in the process you have follow-up questions, don’t hesitate to ask the franchisor. The clearer your intentions are, the better.
Step 6 – Weight in the benefits and make a decision
By this point, you have a realistic offer and you know what the business will cost you. Now’s the time to ask yourself – Is it all worth it? Here, we can’t advise you anything, as this is your personal decision. It all depends on the industry you chose, the company, the location and, of course, you.
Step 7 – Sign the contract
So you’ve come this far. Signing the franchise disclosure document (the contract) will bound you to this company for years. So it’s of crucial importance to make sure you don’t have any uncertainties and no questions left undisclosed. The FDD includes information about the fees, taxes and permission to carry on the trade. It’s signed only after both sides agree.
On your part, you need to prepare the required documents like professional certifications, drivers license and whatever your future career requires.
Step 8 – Hire people to join your team
When you buy a franchise there’s the option to work as a one-man team, but you most probably will manage a team. You have to provide them with uniforms, equipment, tools and check if their vehicles are in good condition. If that’s all set – onto the next step.
Step 9 – Go through training sessions
Most franchising companies host training sessions for both you (the franchisee) and the employees (your team). This practice ensures that the quality of the service. It has to be held to a high standard from each and every franchisee. After all the training sessions are completed – you’re ready to meet the first client.
Do you have any questions?
Don’t hesitate to ask us anything below. We’ll make sure to answer you promptly.