Want to Buy a Franchise? Here's Your Step By Step Guide
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Buying a franchise will help to achieve your dream of business ownership success. However, purchasing a franchise is not a cakewalk. Here are the key steps to consider before buying a franchise.
The first step before buying a franchise is conducting an initial research. Get information about various franchise opportunities available in your location. It is necessary to find the right franchise which suits your budget, qualifications and personal interest. Then, research about the franchise requirements to ensure that you qualify and have proper information. You can also use an online franchise website like Franchiseindia.com to find opportunities that fit your needs.
Identify Individual Franchise companies
Once you are done with your research, evaluate individual franchise companies and select one which you think is the most suitable for you. Try to choose the companies that will have territories available in your desired location.
Franchise Qualification Requirements
To ensure that all the franchisees are eligible in terms of financing and professional experience, franchisors set minimum qualification requirements. This is because the success/failure of a franchisee will directly impact their business, brand image, goodwill etc. Thus, there are few requirements that are often taken into consideration such as Credit score, Net Worth, Cash in Hand, Management Experience, Industry Experience, outside income etc.
Submit Request for Consideration/Application
Once you are done with all the research and analysis, select two or three industry categories. Within each category, pick one to three companies from which to request information. The companies will match you with a representative, and you should receive information back from them in a week by e-mail and/or telephone.
Study Franchise Disclosure Document
After submission of a qualification questionnaire, the franchisor will provide you with the franchise disclosure document (FDD), which contains important information regarding the franchise. Review this information carefully and get any questions you have answered before you proceed to the next step.
In addition to disclosure document, you will also be provided a 14 day disclosure period. A franchisee agreement cannot be signed within this time span. These mandatory periods are provided to give franchisees the opportunity to research, review disclosed materials, and make a well-informed decision about whether they should or not be part of that franchise.
Visit Existing Franchisees
The best way to get information about any franchise is to visit the existing franchise stores. Contact them and clear all the queries you have about the business. This is the best source to get to know about their lives as franchisees and evaluating how well a franchisor supports them.
If you’re about to enter a business, it is necessary to meet the people who will be supporting you to run your business successfully. You can get any of your final questions answered, but will also be evaluating you as a potential franchisee.
Once you have gone through all the above steps, it’s time to make your final decision. The final step in the mutual evaluation process is to sign the franchise agreement and meet the heads and key executives who will work with you as a franchisee. If you’ve carefully followed this process, then congratulations! You’re now into a franchise business.
This article was originally published in Franchise India by Sneha Santra.