Many aspire to start their own brand. But most lack the knowledge and experience to build a business. The good news is that you can increase your chances of starting a successful business by buying a franchise instead.
Many established companies offer franchising to individuals who wish to start their own business. They already have an established business model that you can easily follow and a system that you can readily use. For instance, you plan on buying a hydraulics hose business. You’ll have the necessary support from the franchisor to make sure that your business will succeed.
But like most businesses, there are still risks in buying a franchise despite the guidance of your franchisor. To mitigate these risks, make sure not to make the following mistakes:
1. Failure to secure the right funding
Buying a franchise will require to pay different fees. Aside from the initial franchise fees, you are also required to pay ongoing franchise fees as well as marketing and required product or services fees. There are other fees that you may need to pay, and these are all indicated in the franchise contract. Failure to secure the right funding can put you in a lot of headaches and debt. Make sure to know your financing options so that you won’t end up undercapitalized.
2. Not following the business model your franchisor has given you
Franchise work in a systematized manner. The franchisor already drafted a system that is easy to follow and a business model easy to replicate. They do this to boost your success as they’ve already proven that their system and model are effective. Handpicking the bits you want in their model and only copying some, not the entire system, can put your investment in greater risks.
3. Thinking that you don’t need a lawyer’s help
When buying a franchise, you are to pay a considerable amount of money in exchange for the franchisor’s business system and model. You are sure to sign a Franchise Disclosure Document. You may already have an idea or two about what it may contain, but it is always a must that you seek the help of a lawyer who specializes in such contracts. This way, they can notify you in case there are red flags that you need to be wary of. You can ask your lawyer about the terms you are not familiar with and ask questions that need clarification.
4. Failure to set long-term franchising goals
Some people dive in franchising a business without setting up their long-term plans. This is a big no-no as you should already know what you want to do with your business after a few years or so. Failure to draft your long-term plan and not having a backup and exit strategy will only make things complicated for you in the future. Ask yourself what your long term goal is, and you’ll find it easier to establish a plan in achieving them.
Buying a franchise has its advantages and disadvantages. It is not enough that you know the perks that you can enjoy without weighing the risks first. It is also a must that you learn from the mistakes of others. This way, you already know the things you need to do to achieve more success.