Buying A Franchise: Dos And Do Nots Of Due Diligence
November 22nd, 2009
Buying A Franchise: Dos And Do Nots Of Due Diligence
Buying a franchise is not a simple process; but it can be made easier if you follow some basic rules. Here are some things to keep in mind when investigating a franchise opportunity:
DO:
1. Take your time and educate yourself; it can take several months to find the right business. Commit to the process.
2. Know your financial situation Assets Liabilities Net Worth
3. Consult with a lawyer accountant and/or franchise consultant
4. Carefully read and understand the FDD and Franchise Agreement
5. Create a Cash Flow statement and a business plan
6. Talk to existing franchisees
7. Compare franchises within the same industry segment
8. Take time to understand all the franchise financing options
9. Negotiate with the franchisor fees territory marketing support etc.
10. Go to the Discovery Day
11. Be prepared to make a decision and take charge of you future
Do NOT:
1. Feel like you have to make a rush decision
2. Load up on loans/debt to buy a business
3. Ignore the advice of professional advisors
4. Trust everything the franchise sales person tells you
5. Base your decision on the earnings of best performing franchisees
6. Bypass financial questions during investigation process
7. Cut the due diligence process short
8. Assume that the system will run itself or that you wont have to be an entrepreneur
9. Underestimate the value of a franchise network support and training
10. Fall into Paralysis by Analysis mode
11. Be disappointed if in the end you discover that franchising is not for you.
You will quickly realize that buying a franchise is a deliberate process. If you want to become a business owner franchising will definitely put some options on your table.
However stick to the process gather the information and be prepared to make a decision. In fact be prepared for anything that can prevent you from making a decision.
For more on finding the right franchise go to: http://franchiseopportunitiessearch.com
About the writer: Andre Chernih is a franchise expert editor and manager of the web site http://www.FranchiseOpportunitiesSearch.com a collaborative compilation of information articles opinions and recommendations created to help aspiring business owners learn about franchising and find the right franchise opportunities.
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