Monday, June 15, 2009

Franchising - How to Avoid 10 Common Pitfalls

The purpose of this article is to answer most of the 10 people are challenged when looking to start a franchised business.

1. You will be "sold" on why you have "company":

If a seller of the company is selling you on the idea of why you should buy this franchise, to understand that this is a biased opinion. Use the information the seller gives you, but do your own research on why you should have this business.

2. Not focusing on the business model and how it fits your lifestyle:

A name or type May be catchy, but is it good for you? By focusing on the business model are you closer to your natural best choice. A business model will focus on your goals and needs and help you adapt your lifestyle desired number of employees to manage the income you need and want, the number of days that you are "open" a week, the number of hours you are "open" a day, the location of your business, etc.

3. Friends and family tell you that it is the "best company to be in:

A family member or friend may be the best intention, but you must choose. Take their advice and use it to help you in your research. May they give you some good information to use in your research, but research must be done by you.

4. No time to "Validation":

The validation of a franchise is the most critical in your search. Validation is simply whether the company is to do what they say they can do. You can contact existing franchisees and ask them. Their success, their concerns, expectations, income, and their relationship with the franchisor can and should be considered in a professional and confidential. You also have the opportunity to contact the previous interview and franchisees. Find out why they are no longer a franchisee. Did they sell for a profit or have to close because of failure?

5. The FDD is just too complicated and full of legal jargon:

The FDD is not full of legal jargon, but should be reviewed by your lawyer if you are close to signing documents. The FDD have a list of all franchisees, current and former owners, with addresses and phone numbers. It will also contain all the disputes. The FDD will tell you all what is expected of the franchise, including costs, fees, length of contract and expectations of the company.

6. Working without a franchise consultant:

A franchise consultant is working with hundreds of companies selling in relation to a person working with this company in particular. The consultant should be impartial and to focus on your goals. A franchise consultant should refer to companies that you are qualified for both financially and professionally. A franchise consultant should never pass your name or confidential information to a company without your consent. A franchise consultant is your best interest in mind. They are the "twinning" and not the seller.

7. By focusing on the "Top Franchise" lists because they are the "best":

The "best franchise" lists are available in many publications. They are good to look for ideas. Find out what these companies are on the "top" list. It is usually based on total sales or quantity of most sites franchisees. ... Remember, more is not necessarily better. The same validation should still take place even if a company is listed on one list. Some companies choose the free to stay small and keep their franchisees very happy and healthy.

8. Not having enough working capital:

There is a reason, FDD financial needs mentioned. They need you to succeed to enable them to be successful. Do not go beyond your financial limits. A franchisor wants you to have enough capital to focus on growing your business. There is a period of commencement of any enterprise shall, before it starts earning money. When you do your validation, what the average start-up company (break even) time to be profitable.

9. Without giving enough time for research and validation:

The beauty of a franchise is that you have predictable results. If you do research, the day you open the doors of your new business, you know what to expect. Predictable results and expectations are met or exceeded are invaluable. You'll have the time to research and validation.

10. Do not have an exit strategy:

Most successful entrepreneurs have an exit strategy. May you choose to be in this sector for the next 20 years, but you know regarding the options of sale, transfer of ownership to a family member, or other output options.

As you probably realize, buying a franchise is a serious process. There is so much information available there ... But ultimately, it can give you the opportunity to be in control of your future.

For more information, arrived at http://franchise-opportunities-search.com

Franchise Opportunities-Search is a compilation of items of information, opinions and recommendations designed to help aspiring business owners learn more about franchising and find the right franchise opportunities.

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