So you’re interested in buying a franchise. What next?
There are many reasons to buy a franchise. Whether you’re attracted to the prospect of running your own business, the support that being a part a franchise system offers, owning a business that already has an established presence and reputation, the higher rate of success franchised businesses experience over other start-ups or one of any other number of advantages of purchasing a franchise, it’s important that you carefully consider and evaluate whether buying a franchise is right for you and, if so, whether a particular opportunity is right for you.
Unless you already have a wealth of experience in the franchise industry, you’re probably going to want help with this. The good news is that there are lots of amazing professional service providers in the franchise industry that can provide you the guidance and assistance you require to feel confident moving forward with a franchise purchase. Below are some examples of the types of service providers that are available to you when you’re considering purchasing a franchise and the services they can offer you.
Franchise consultants help match people interested in purchasing a franchise with franchise opportunities that are well suited to them. A franchise consultant will meet with you to learn about your particular experience, skills and circumstances then try to match you with a franchise opportunity with one of their many partners. This can save you a lot of time and effort seeking out these opportunities on your own and, potentially, spending time and money looking into (or evening joining) franchise systems that aren’t a good fit for you. And the best part… many of these services are available to you at little to no cost because franchise consultants are often compensated by the franchisors who rely on the consultant’s services to identify strong local franchise candidates.
Buying a franchise is a significant financial investment and most people buying franchises do not have sufficient money on hand to buy a franchise without securing some sort of financing to assist with the purchase price and start-up costs. Luckily, because franchised businesses enjoy a higher rate of success than other start-ups (and for a number of other reasons), affordable financing is more readily available to assist with your purchase of a franchise. Many financial institutions even have specialists that are specifically available to consult with potential franchisees and assist with arranging a manageable financing plan for their purchase of a franchise.
In addition to the day-to-day operation of a business, owning and operating a franchise typically involves a fairly significant amount of administrative work. For example: annual, monthly and/or weekly accounting and bookkeeping; filing of tax returns; and, payroll administration. These sorts of tasks can take up a significant amount of time – time you’re not spending running and growing your business. The importance of completing these tasks properly and promptly, however, cannot be overstated. If you will not have the expertise or resources available internally to complete these tasks, retaining the services of an accountant, bookkeeper and/or other business service provider may be an excellent investment for your business. By meeting business services providers before purchasing your franchise you can explore the services available and assess what the needs of your business will be, and also offers you the opportunity to get advice on setting up your business in a tax efficient manner for the future.
Finally, a franchisee should always consult with a lawyer before purchasing a franchise. Too often the reason new franchisees don’t retain a lawyer in connection with the purchase of a franchise is because they believe that the franchisor will not negotiate the terms of the franchise agreement and, therefore, that retaining a lawyer is a waste of money. While this is sometimes the case, more often than not there are some areas of a franchise agreement that a franchisor will negotiate. An experienced franchise lawyer can help identify those areas. There are also numerous other benefits that franchise lawyers can provide when you are considering purchasing a franchise. These include: reviewing the disclosure document provided by the franchisor for compliance with applicable laws; setting up a corporation for you to own the franchise through; ensuring there are no errors in the franchise agreement and related documents; and, explaining the franchise agreement and any other document associated with your purchase of the franchise so that you have a full understanding of the terms and conditions that will apply to your operation of your franchise for the term of the agreement.
If you’re interested in learning more about how to buy a franchise and the services that are available to anyone considering purchasing a franchise, please join David Broughton (FranNet), Natali Peters (FranNet), Kamal Kaawar (RBC), Scott Furlonger (Padgett Business Services) and I on March 20, 2018 for a presentation that will cover everything you need to know about purchasing a franchise. Please see below for details about this event and RSVP’ing to attend. We hope to see you there.