When it is time to buy a franchise, you can buy either an existing franchise for sale or a new one. Knowing exactly how to evaluate franchise opportunities is crucial for making the right decision. While there are many excellent opportunities, the franchise market is not a one-size-fits-all proposition. Personality, skill sets, and financial risks are all factors that must be considered.
Compatibility of the Business Model with Buyer’s Personality and Expectations
Forbes suggests that you assess your strengths and weaknesses before moving forward with the purchase of a franchise. It is no secret that every person has unique skills and natural abilities that qualify them for success. Taking a personality test to identify your compatibility with certain franchises is one way to assess the viability of different opportunities. For example, if a test determines that you are a detail-oriented person and would be a good candidate for getting into accounting or bookkeeping, then an accounting franchise might be a logical choice.
Another good way to identify an appropriate franchise business for sale is to get feedback from friends and family members. Can they imagine you in that type of business, or not? Ask them to explain why or why not and you can gain some insight into how others see you and what strengths and weaknesses they have noticed.
Conduct Research to Evaluate Prospective Franchises
Smart buyers don’t believe whatever they are told by franchise representatives without verification. It is important to conduct research to discover the truth about any opportunity. The Financial Disclosure Documents (FDD) for a franchise contains the names and contact information for all current owners of a franchise. Calling franchisees is one of the best ways to get important information about the pros and cons of buying into that franchise. Call as many franchisees as you can to find out what their experience has been. It is better to find out any negative aspects of buying into a franchise before the purchase than to regret buying because you did not do your research.
The FDD also offers critical decision-making information about bankruptcy data, training offered, litigation and costs that is critical information to consider before making an informed decision about whether to buy or pass on a deal. An informed buyer is more likely to make a good decision.
Hire Professional Legal and Accounting Help
Hiring professional accounting and legal help makes sense when evaluating any opportunity. It is easy to overlook important details that are buried in contracts or financial statements if you aren’t versed in reading these documents. Only foolish businesspeople go it alone without surrounding themselves with expert advisors.
Ready to Buy and Invest in a Franchise Business?
A Consumer’s Guide to Buying a Franchise which is published by the Federal Trade Commission is a good place to start when considering a franchise. Evaluating costs, restrictions and franchise history guarantees that a buyer will educate himself about how franchises work and what needs to be considered. Information is power when considering the purchase of a franchise.