10 Steps to Buying the Right Franchise Opportunity
There is no way to secure a job or future finances in today’s market unless you own your own business. Between recessions, unemployment, credit, and the stock market, it’s hard to determine whether anyone will have a job tomorrow. Counter that with the fact that most states in the US are ‘at-will’ states, and there is no such thing as job security unless it’s written into your contract (if you have one). With that said, you may be looking at a certain franchise opportunity to secure your finances. As you tread the franchise buying process, takes these steps to make sure you hit all the right points on your journey to business ownership.
1. Evaluate Yourself
Before you take advantage of any business opportunity, you should evaluate yourself on how well you believe you would do at business ownership. It’s definitely not for everyone, though the skills are learnable to anyone willing. In addition to having the right personality for business ownership, you must also have a passion for people and the industry. You may find that it is in health and beauty or it could be in the cleaning industry. Then you will have to evaluate your finances.
2. Secure Financing
The moment you begin to consider a franchise opportunity as your future, you will want to start looking at the different ways you can secure the appropriate finances for the endeavor. Between grants, loans, investors, and relatives, there are more than enough resources at your fingertips in order to insure appropriate financing.
3. Research Industries
If you’re not already sure which franchise opportunity you want to take advantage of, begin evaluating different industries. When you’re evaluating yourself, you may want to consider thinking about
what you are passionate about, what you really care about, and what you would enjoy going to ‘work to’ every day. Note that whatever industry your franchise is in is likely to become an obsession.
4. Pay Attention to Recession Resistant Programs
As you research different industries and franchises, keep an eye out for the numbers that point towards a franchise as being recession proof. The way you can spot a recession proof franchise opportunity among all the other results is whether the gross income of the industry continued to grow through a recession. For instance, the pet industry has shown continual growth in profits in the US, despite the most recent recessive years, meaning that pet franchises are recession proof.
5. Choose the Franchise Opportunity You Want
Whether you’re interested in a single franchise opportunity or you see multiple franchises opportunities that are speaking to you, put them on a list you can reference back to later as you gather more information about each of the franchise.
6. Request More Information
Visit the websites for each franchise opportunity you are looking into. There should be plenty of information on what the franchise offers to clients and if you go to the franchising side, you should see information regarding what franchisees can expect to get. There should be buttons on the websites to request more information with. You can also try and make contact with the franchisor or franchise headquarters and begin asking any questions you have that will change your interest in the franchise opportunity with the specific franchise.
7. Read the FDD Carefully
Every franchise opportunity will come with a document known as the Franchisor Disclosure Document (FDD). The FDD details all important information prospective franchisees should know about the business before they commit. Often, a nondisclosure agreement of some kind must be signed before the company delivers the FDD to the prospect. This document will contain specific information such as history of executives and litigations, annual income of current franchisees, a copy of the franchise contract, and much more. To read the FDD much more carefully, it’s highly suggested that individuals hire a business or franchise attorney to help go over terms and information given in the FDD.
8. Call Existing Franchisees
After you’ve received the FDD from a franchisor, you shouldn’t worry about being pressured into making a decision. The laws surrounding franchising state there is a 14-day cool off period after someone receives the FDD. This is in order to prevent franchisors from pressuring prospects and to help you make the best decision you can in regards to the right franchise opportunity. During this time, you should call franchisees listed in the FDD and ask any specific questions about the franchise or franchisor of current franchisees.
9. Visit Franchisees and the Franchisor
If you’d like a better look at the franchise opportunity you’re considering, you should consider taking a visit to local franchisees. Make sure you ask before you show up if you’re going to want to ask more questions of the franchisee. If you want to get a better idea of who your franchisor is, you can always ask to visit the headquarters or meet the franchisor in person. Note that you will typically be responsible for paying for your own travels at this point.
10. Sign the Agreement and Buy the Franchise
After reviewing all the appropriate information and speaking to the right people, once you’ve decided on a franchise, it’s time to sign the legal papers and move from franchise opportunity to franchise ownership. After the long process of research, the ending process can sneak up on you as happening very quickly, but remember that buying the franchise is only the beginning of your business ownership experience. Before you sign any paperwork, you always want to make sure that the franchise opportunity hits all the right boxes, such as:
- Provides a Recession-Proof Occupation
- Provides You with the Lifestyle You Want
- The Franchise Will Help You Achieve Your Dreams and Goals
- You’re Able to Use Your Skills and Experiences
- Your Financial Resources Meet the Needs of the Project