Wednesday, July 15, 2009

The Key to Buying a Franchise

The key to buying a franchise is the Due diligence process. This is true for both the Franchisor and the potential franchisee. This is the process most candidates often overlook.

Buying a franchise is different from the purchase of almost anything, even from buying an existing independent business. The key to energy because the process is the franchise disclosure Document (FDD), earnings claims (if any) and the ability to communicate with current and former franchises.

Speaking on the current franchises are especially important. A solid franchise or a savvy franchise consultant can provide you a number of tips on how to go about finding the best information. Often, potential candidates say they are uncomfortable with asking the tough questions. They want to "inconvenience" of people search the intricacies of the financials and all the details on operation. The emotion is evident, but to make the right choices when buying a franchise you have to get more details from the franchisees in the system as possible.

During the process of due diligence I suggest organizing data collected. The best way to do this is to create a spreadsheet to track all the variables of business. Each franchise is the candidate speak to have specific circumstances which apply to their particular situation. However, with proper preparation, after speaking with 5, 10 or even 20 franchisees, analogy appears and all processes will start to make sense.

At the same time, in addition to learning more about the franchise company, the candidate will gain understanding of numbers and operations of a franchisor which came very handy when putting together the a business plan, applying to the financing or proof of your findings with your accountant.

Keep in mind that during this process, the franchisor will perform due diligence on their candidate. The best companies do not sell their verdict just anyone. They have a lot at stake in bringing the right people and the power of significant resources to minimize their risk. Successful franchise systems offer their business model only if they think that the candidate fits their profile.

Finally, due diligence is the key to finding the right franchise business. It takes time and effort, and most people want to buy a franchise has no experience doing this. However, if the potential franchisee has a plan and is well prepared and organized, making due diligence can help avoid costly mistakes.

For more information got to:

Franchise-Opportunities-Search is a compilation of information of articles, opinions and recommendations designed to help aspiring owner of the business learn about franchising and find the right franchise opportunity.


  1. You need to know your field well and ust be wiling to give hard effort to survive the business. Thank you.

  2. Agree, buying a franchise is different from buying anything. I think it needs help from professional. If someone is planning to buy a franchise then they must contact to a franchise consultant.