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Determine Your Investment, Skills and Goals Whe You Buy A Franchise
A proper plan to help buy a franchise to meet your objectives.
There are a number of factors to address before you buy a franchise system. Listed below are a few questions for you to address prior to making the investment. When addressing these questions it’s important to be very honest with yourself. Having a proper plan and being better prepared will help you make a more informed decision and increase your chances for success.
Before researching specific concepts, it’s best to assess your current financial situation to determine if you have the financial resources to be successful. Many people want to buy a franchise, however, that does not mean it’s a good option. One of the biggest reasons for failure in business is not having enough money to fund the business. Below are some questions that will help you in determining your financial situation. It’s also recommended you speak with your CPA or Financial Advisor if you need assistance.
How much capital is available for the investment?
Do you have adequate working capital to fund the business while it’s growing?
Are you comfortable in knowing that you could potentially lose your investment?
Are you purchasing the franchise alone or with partners?
Do you really want to buy a franchise?
Will you need financing to purchase the franchise?
How do you plan on obtaining the required financing?
Do you know your current credit score?
Do you have adequate savings and/or additional income to cover living expenses before you achieve profitability?
Assess Your Abilities – In addition to your financial needs, owning a business will require specific skills. Some franchises systems will require a candidate to have experience in the industry if they are to become a franchisee. Below are some helpful questions to consider before speaking to specific franchise concepts:
Does the franchise require technical experience or special training or education?
What special skills set can you bring to a business?
Are you comfortable with sales?
Are you comfortable and have experience in managing employees?
What experience do you have as a business owner or manager?
Determine Your Goals – Before you buy a franchise, it’s important to have a clear understanding of your
financial and lifestyle goals. Listed below are some questions to help. Work with your CPA and Financial Advisor. Write down your reasons for buying a particular franchise.
Do you need a specific annual income?
Are you interested in pursuing a particular field?
Are you interested in retail sales or performing a service?
How many hours can you work? How many are you willing to work?
Do you intend to operate the business yourself or hire a manager?
Will franchise ownership be your primary source of income or a supplement to your current income?
Do you get bored easily? Are you in this for the long-term?
Would you like to own several outlets?
Important factors when you buy a franchise
There are many risks when you buy a franchise
When you buy a franchise it’s like any other investment. There are risks to consider and thus it’s important to consider certain factors when you are researching a particular franchise. Here are a few factors to help with your research.
Demand – Is there a demand for the franchisor’s products or services in your community? Is it seasonal or consistent? Is the business simply a fad, or does it have long term viability? Does the product or service generate repeat business?
Competition – What’s the level of competition nationally, regionally, and locally? How many franchised and company-owned outlets are in your area? Does the franchise sell products or services that are easily available online or through a catalog? How many competing companies sell similar products or services? Are they well established and widely recognized by name in your community? Do they offer a similar product at a similar price?
Your Ability to Operate the Business – What happens if the franchise system fails? What will happen to your business if the franchisor closes up shop? Will you need the franchisor’s ongoing training, advertising, or other help to succeed? Will you have access to the same suppliers? Could you conduct the business alone if you have to cut costs or lay anyone off?
I Want to Learn More About Buying a Franchise!
If you’re serious about buying a business and want to learn more about how our franchise consulting and brokerage services can help you please call 866 934 7167 or email us at firstname.lastname@example.org.