Buying a franchise is a major life event that can have many benefits for the new owner, but it is not as simple as going down the store for some groceries. The process for buying a franchise can be very complicated, and a single mistake can jeopardize your business’s success. Common errors that anyone can make include:
Assuming you will be your own boss
While buying a franchise will make you the owner of the location, you will still have to report to the orders of the franchise. It is essential to understand the relationship between you and the franchise before committing to a contract with them.
Following the advice of a franchise coach
A franchise consultant may have a lot of useful advice for you, but their main priority is benefitting the company over your needs at the end of the day. Their commission agreements can make their advice biased toward their own interests instead of your needs.
Not making an exit strategy
If it ever comes to the point where you want to break your lease before its end date, or you want to close your contract prematurely, it can cost you more money on top of your actual loss. Make sure you create a plan that accounts for matters like loan repayment, any rent you may owe, and other franchise fees.
Not understanding the market
Opening a burger shop across the street from an already popular one is a common example of not understanding the market. Depending on the franchise you are considering, there may be other challenges you have not considered. Talk with other franchise owners to get some insight into what you should know about owning your franchise.
Not having an attorney look at your purchase agreement
The contract you sign with a franchise can be complicated to get out of. If the contract is not in your favor, you may find yourself stuck in a bad position for a long time. Let a business law attorney review your documents before you sign anything. Their experience can help you create an agreement that you can be comfortable with or give you the information you need to walk away from a bad deal.