Buying franchises in Canada, or anywhere else in the world, entails a long and difficult path to pursue for the untrained investor. However, equipped with the right information and resources, franchise buying can become less painful and a lot safer. We have broken down the process of buying a franchise into five easy-to-establish steps that serve as guidelines on the road to becoming a successful franchisee. Here are some details about these five stages of the franchise buying process:
- Find right franchise – The course of action for franchise buying starts with determining which franchise suits you best as an entrepreneur and individual. There are thousands of franchisors operating in a wide variety of industries, which makes choosing the right franchise challenging. It is best to make an investment in an industry that you are either experienced in or familiar with rather than an industry that you have no clue as to how it works.
- Understand your investment – Buying a franchise is a major step and a life-changing experience. It begins with large investment usually coming from your life savings. Most want-to-be franchisees think that they can make an initial investment and do not have to worry about follow-on money. This is a mistake. They need to look beyond the initial investment and ensure they have enough money left over for other costs, such as legal fees, build-out costs, working capital, supplies, franchise fees, and many other costs associated with buying and operating the franchise.
- Investigate franchisor – Once you’ve concluded the first two steps and you know what franchise suits your budget and lifestyle, you can proceed with investigating the franchisor. Number of resources exist online and offline that can arm you with wealth of information without spending a fortune. You should investigate how the company treats its franchisees, whether or not the company supports long term relationships with their franchisees, and what is the actual approach of the franchisor to the entire process before and after the deal is closed. Talk with other franchisees and meet the executive team of the franchisor. Get your questions answered!
- Consult with a franchise lawyer – Unless you are an expert in franchising, you cannot possibly be familiar with all the legal implications of buying a franchise. A simple meeting with a well reputed and experienced franchise lawyer will help you understand your rights and responsibilities when buying and running a franchise. You should not sign a franchise agreement prior to clearly understanding every term and every line of the documentation.
- Establish a business plan – Your business plan is your guideline to success. It is also your best ally in getting financing in case you don’t have enough money to cover yourself. Furthermore, the business plan conceptualizes your business and personal goals. Drafting your business plan will reveal weak and strong points, allowing you to make the necessary changes prior to engaging in this experience and spending your fortune.
Operating and running a franchise has brought success to the lives of many professional individuals defined by entrepreneurial spirit. Buying an already operational and successful concept is very inviting perspective in the eyes of an investor. However, you still need to make sure that your decisions are well planned and extensively researched.
Written By: George Hillston