If you’ve done any research on the franchise industry, it’s likely that you’ll run across some bold claims by various franchise advisors claiming they can get you your dream business.
The following are some of the most common mistakes to avoid when searching for a franchise. This list is not exhaustive but will give you an idea of what NOT to do when looking for a franchise.
1) Not doing enough research on the brand/industry you’re interested in
When trying to find your future business, it’s essential that you have a good understanding of what business type interests you and why. If not, then how do you expect to know which one would be best suited for your interests?
2) Having unrealistic Franchise opportunities is not something you should buy without doing the proper research.
Many people find themselves faced with their dream franchise opportunity but it’s not always what it seems. You should consider hiring a franchise consultant to help you make an informed decision about your future business venture.
3) Letting emotions take control
Buying a franchise is not one of those spur-of-the-moment decisions, though this may seem like the case when you come across your ‘dream’ business. The idea that there are franchises that have been around for 20 years or even more just might be enough to convince you to purchase without further ado. But ask yourself, can you maintain it?
4) Failing to do background checks on the franchisor.
Franchise opportunities are widely available online, but this also means that there are many opportunities to get scammed. There are people who claim to be consultants acting as brokers and even advertising themselves as franchise consultants when they aren’t qualified. An easy way for you to tell the difference is through licensure: an actual franchise consultant should always be licensed, while a broker or salesperson will never need one.
5) Buying a franchise without considering how it will affect your credit score.
If you’re purchasing a franchise, make sure that you don’t put yourself in debt before doing thorough research on the brand/industry. You will want to ensure that you can provide proof of sufficient capital (including liquid assets) for operating your business and continuing its growth. It’s best not to rely solely on loans to finance your franchise business.
6) Taking out loans without considering how it will affect your credit score.
Franchise opportunities are widely available online, but this also means that there are many opportunities to get scammed and risk getting bad credit by doing so. When you purchase a franchise, make sure that you don’t put yourself in debt before doing thorough research on the brand/industry. Also, since franchise fees often range from $20K-100K+, be prepared for this type of upfront payment as well as any other costs associated with starting up a new business. It’s best not to rely solely on loans to finance your franchise business.
7) Putting all of your eggs in one basket diversifies!
You might think that finding a franchise is the equivalent of winning the lottery. But don’t forget to diversify your investments. Rather than putting all of your eggs in one basket, you might want to consider just starting out with one business and then expanding later. It’s much easier to maintain than multiple businesses at once.
8) Staying small – make sure you have enough capital and experience before expanding.
You may be tempted by that ‘one-of-a-kind’ opportunity promising rapid growth, but it’s best not to jump the gun. Make sure you have enough capital and experience before considering an expansion. More importantly, never take on partners whom you won’t be able to rely upon during hard times.
9) Hiring inexperienced employees Franchises aren’t always the easiest to run.
Employees who aren’t on top of their game will cost you thousands of dollars. May even risk your franchise brand. Franchisees should be as committed as possible so as not to set a bad example for those working with them. Not hiring experienced employees, paying low salaries, or taking advantage of unpaid interns is just one-way unqualified franchise owners can ruin the image and reputation of your business.
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Conclusion:
We hope that this blog post has given you some insight into the worst mistakes to make. When searching for it. If you’re still unsure about what franchising is and how it could benefit your business, get in touch with us! Our team of experts at Franchise Consulting Group will be happy to answer any questions. Concerns you might have about franchising. As well as help navigate all steps involved in finding your perfect match.
