5 Tips for Buying a Franchise

5 Tips for Buying a FranchiseIf you are an entrepreneur who has always wanted to start their own business, buying a franchise can be a good, less risky, alternative.  It is often much easier to begin with a pre-made business plan and brand name recognition, but your success is ultimately up to you.

Here are five tips for buying a franchise, as published by Small Business Trends:

Do Your Research

Before making a purchase, it is always in your best interest to research what exactly you’re getting yourself into.  Start by reading the Franchise Disclosure Document (FDD) to find important details about the company, litigation, and bankruptcy history, as well as any initial fees and obligations.  It is important to find out what exactly your role as the owner will be.

Think About Your Location

Any successful business and restaurant owners will reassure you that everything comes down to location.  Choosing a location for your business is one of the toughest, as well as most important, decisions you will have to make.  Many franchisors will work with you and give you their advice on what will work best, but the decision is up to you in the end.  It is imminent that you consider details such as traffic patterns, parking, nearby stores, and check with the franchisor that you’ll be guaranteed protected territory.

Focus on Service

Buying a franchise gives you a clear-cut marketing plan to bring in new customers.  However, it’s entirely up to you to create and define the customer experience.  The experience and employee-customer interactions can make or break any business.  Be sure to hire a staff that will go the extra mile to leave great impressions on your customers.  If you’ve never managed a team before, you may want to consider training on how to manage people effectively.

Consult a Specialist

It is in your best interest to consult a business attorney to sort out tax rules and contracts surrounding your franchise, for they tend to get complex.  An attorney can help you identify any potential red flags.  You should also contact an accountant to help you understand all of the operating costs of the business, as well as tax considerations.

Don’t Forget About a Formal Business Structure

When it comes to franchises, a formal business structure is absolutely critical to separate your personal assets from your business.  It is very common for franchisers to sign contracts with established companies (LCC or corporation).

Buying a franchise is a very big decision, be sure to contact an experienced business lawyer to help you sort out any details and tax rules, as well as give you guidance.