Looking for a franchise? Check out these 5 must-read top tips
Buying a business involves investing your time and money, and you want to get it right. Here are five essential tips you need to read before seeking a franchise.
1. Before you buy: seek expert advice
When you sign a franchise agreement you are signing a legal contract. If you don’t completely understand the franchise agreement, don’t sign! It's always advisable to invest in expert advice on all the documentation and the business plan - both legal and financial.
2. Before you buy: do your research
Due diligence is just another term for research, but a report by Griffith University indicates that fewer than 20 percent of franchisees and independent small business owners surveyed properly understood the term.
If the idea of doing research before you buy is deterring you consider this: yes, conducting research is time consuming, and the costs can add up, but there's a lot at stake. If you are poised to make a big investment in a brand, you need to do it justice with sufficient research.
Seek independent legal, accounting and business advice from professionals who have experience in the franchising sector.
3. Before you buy: train yourself
The more knowledgeable you are about franchising, the better informed you will be for decision making. The good news is that the Franchise Association of New Zealand has a Franchisee Pre-entry On-Line Education program run in association with Massey University.
4. Before you buy: seek out other franchisees
Speak to as many existing and former franchisees as possible - this way you will hear firsthand what really goes on between franchisee and franchisor, and gain a better understanding of the business.
Ask current franchisees if their earnings match their expectations. Ask former franchisees why they left the system.
5. Before you buy: discover your passion
There's a saying: 'do what you love and the money will follow'.
So follow this mantra and ensure sure your choice of franchise category and brand can keep your interest going for the years of the franchise term and is something you would be willing to burn the midnight oil for if required.