Steps to Buying a FranchiseHow does the whole process of buying a franchise go - from choosing the business to signing documents March 27, 2017
You must be a person, who’s considering buying a franchise. You know your strengths, you’ve prepared yourself mentally and you know you can do it. You maybe even have set eyes on a particular business.
There are loads and loads of articles, that encourage you to take the next step. They give you a million reasons why you should quit everything and run a business. But only a few get into detail with the step-by-step process of buying a franchise.* This is exactly what we’ll discuss here.
*Yes, there are books, that promise explanation how to launch your new career, but sometimes people actually need the boring part – what to look for when signing documents, more information about fees and so on.
Even though the process is serious, it shouldn’t scare you off. Big tasks can seem intimidating, but once you break them down to smaller ones you’ll see it’s all manageable. Practice that and you’ll be fine.
Without further ado – here are the steps to buying a franchise.
Choosing the right business
Step 1 – Do your niche research.
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 have a future?) Are there thriving companies in this niche, which sell franchises?
Let’s start discussing them one by one.
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.
Onto the next step…
Step 2 – Research the 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 – Contact your chosen business. Organise a meetup.
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.
Details, Costs and Benefits
Step 1 – Meet up. Discuss the extra details.
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 2 – 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 3 – Calculate the benefits. 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.
Documents, Team, Training Sessions
Step 1 – 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 2 – Gather a 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 3 – 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.
Don’t hesitate to ask us anything below. We’ll make sure to answer you promptly.