How To Buy A Franchise
Most people dream about starting a business and controlling their destiny. Some of those independence seekers have figured out that franchising offers a path to own a business while eliminating the unknowns as lets you use a proven system and get support from the experts that know how to make it work. Which raises the question:
How do you buy a franchise?
While it may seem simple at first, there are some things you may want to consider to ensure this purchase could be a home run for you.
- Use experts to help you with your search, funding and purchase
- Take your time, the right choice is better than a fast pick!
- Follow the process, make a good impression. This is a mutual investigation.
- Explore outside your initial preconceptions of what business you want to own
- Involve all decision makers in the investigation process
Let’s look at those in a little more detail.
While most people hesitate to get expert advice in their job we have found that experts can be very valuable in the franchise search and purchase process. The least known expert available to franchise buyers are Franchise Consultants, you just met one… ME!
I and folks like me work with people searching for their perfect franchise. You could expect to go through some sort of information gathering process to learn about your likes, dislikes, skills, how you want to work and what you want to build so that we can look at franchises available in the market and match your criteria to those seen in the brand’s most successful franchisees.
With roughly 4,000 franchise brands out there it can be overwhelming to try to figure out which ones fit you best. The initial sorting process many candidates use is to look at all the companies they know to be franchises and which they frequent as customers. I can tell you that the life of a business owner is very different than the experience of being a customer. There are some outstanding businesses I frequent that I should never own. It is best for me, my goals and my family life if I remain a raving fan of those businesses.
Working with a Franchise Consultant should go well beyond just finding the matches; your consultant should be available to you at every step of the investigation process to answer general business questions, strategize and provide resources you may need to make the process easier or more complete.
Here is the great part, most franchise consultants are set up to provide you expertise but send the consulting bill to the franchisor if you move forward with them. We provide them some value in getting the right candidate to the right franchise.
In addition to Franchise Consultants, there are some amazing franchise specific funding companies out there that provide a myriad of resources for making your dream come true. They may offer options like SBA loans, conventional loans, equipment leases and specialized programs like retirement rollover funding where you can access your retirement funds without tax or penalty implications via a special application process that has been IRS approved (don’t just go empty your 401k or IRA!).
If you feel you need an attorney to review the Franchise Disclosure Document (FDD) then you will want to make sure you are using a franchise attorney that is specially trained to work within this industry and understands what can, and can’t, be changed a franchise agreement. Using a specialist could save you a considerable amount of money as compared to using your family or a general contract attorney.
In special cases you may even want to use commercial real estate brokers or other specialists at places in your investigation if they can answer more questions than the franchise brand you are considering.
With all of the excitement that this process could be formed on I want to make sure that someone tells you to take your time.
We know that by law you can’t buy a franchise in under about two weeks from the time you receive your Franchise Disclosure Document. In practice you will probably need more time than that. Our average franchise candidate takes about 6 weeks from when we discuss franchises to the time they have made a decision. This is a big decision, do your homework!
The process of buying a franchise is interesting in that a good franchise company should be less interested in selling you a franchise than they are to find the right owners. This is a mutual investigation; while they are teaching you about their franchise, their team should also be learning about you and determining your likelihood for success. The franchisor has to offer you a franchise before you can buy one; great brands don’t just sell to anyone.
One of the fun parts about what I do is seeing what the best fits for our candidates are, sometimes it is what they may least expect. Some come in looking at restaurants and end up owning a service business. They may find that their perfect match is a better way to find their desired lifestyle than what they would have found in the businesses they had come in targeting.
And finally, if you are married or have a significant other you will want them to go through the entire process with you. I would imagine they were involved in the last house you bought, a business is a large purchase as well and you will want everyone on board to make life easier as you are building your business. Most decisions to buy a franchise happen over the kitchen table at home.
When your spouse goes through the process with you their questions get answered direct from the source and they can get comfortable with how franchising mitigates risk while providing a way for you to use the same skills you used to build someone else’s asset to build your own.
Of course, if you have any questions please feel free to contact me directly.
What is your success story? Let’s go find it!
George Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. Contact the Franchising USA Expert George’s Hotline 703-424-2980.