With innumerable franchises for sale across industries, the opportunities are plentiful but it has become increasingly difficult to pick the right venture to get into. To buy a franchise is definitely less risky than a startup from scratch but it’s not immune to failures either. When you get into operating a franchise, there are essential factors to take into account such as franchisor’s agreement and support, equipment costs, business model and brand history and performance to mention a few.
Understanding these key components will help you steer away from common franchisee mistakes that can make or break your business venture. Some mistakes to avoid include:
1. Not creating a frugal budget plan and not having enough capital to jumpstart the business. New ventures are expected to rack up steep startup costs but there are ways to lessen the blow. Equipment costs, for one, can be lessened by scouting for low cost options with equal quality. Do not simply rely on recommendations from your franchisor. After you buy franchise, the business is essentially ready for operation but make sure you have sufficient capital and a sound financial plan to keep it afloat until it get past the startup phase.
2. Not sticking with the business model provided by your franchisor. Exploring other cost-effective ways to do business is good but you can try to strike a balance. Most franchises for sale come with its own franchising system because it has been proven to translate into profits. This is also one of the reasons why you got into franchising in the first place because it eliminates the need to create your own business mode from scratch. Instead of ditching your franchisor’s business model, follow it through but stay flexible.
3. Not taking the time to read and understand the Franchise Disclosure Document (FDD). As a franchisee, it is your right to see the FDD as mandated by law. Before you invest and buy franchise, it is highly recommended to go through the document that will tell you of your franchisor’s turnover, sales history and cases of litigation if there’s any.
4. Not seeking franchisor support and failure to talk with current franchisees about the pros and cons of the venture. Don’t hesitate to seek out fellow franchisees. If you cannot get enough information from your franchisor, one of the best ways to acquire the details you need is through business owners who have already done it. Once the deal is done, make sure to take advantage of franchisor support and assistance. Most franchises for sale nowadays have support programs designed for franchisees to encourage them to invest. It’s only right to get as much help as possible until your business gets off the ground.