“If I buy a franchise instead of starting my own business, it’ll be easier because I’m buying into a proven system.”
Sound familiar? Is this a sentiment you share? It’s a common misconception among aspiring business owners and entrepreneurs. Although in theory the statement seems as though it shouldmake sense, experience suggests otherwise.
What works now, may not be in your best interests in the future.
Before you sign on the dotted line, take into careful consideration what the business arrangement entails both today and in the future. Plenty can change in 5, 10, 15 years and it is critical that your franchisee agreement reflect that.
- Is the franchisor flexible?
- Are there unsustainable lifetime royalties in the deal?
- Do you have fair exit options?
- Who owns the lease? You or your franchisor?
- Are there renegotiation options?
- Is the arrangement cooperative?
Weigh your options. Read between the lines. Understand the commitment. Ask yourself, what am Ilosing by partnering with a franchise?
Inexperienced? Buying a franchise isn’t going to change that.
Don’t bite off more than you can chew. If you don’t know the first thing about running a business, buying into the franchise model won’t solve your problems. Be careful that you are not misguided by the power of the brand behind the name. It isn’t as simple as acquiring predesigned plans, guides and procedures ready for implementation right out of the box.
Running a franchise requires sales, marketing, operations, financial and management skills – just like any other entrepreneurial venture. If you are not equipped with the essential skills required to build a successful business, whether you select a franchise or choose to start your own company, the outcome will be one and the same.
You’re not buying an income. You’re buying the potential to make one.
A franchise doesn’t produce results for you. It doesn’t provide a template from which you can run a business without the slightest issue or complication. And it can’t solve your problems or make decisions on your behalf.
Franchise owners are business owners. Their responsibilities mirror one another. It is an endeavour – one that has the potential to be very lucrative, but an endeavour nonetheless.
Making the right purchase decision is no easy task but the assistance of a professional advisor you can trust is invaluable. Consider calling upon a corporate legal attorney to help.