Deciding that you want to open a franchise is a big step toward owning a business. You have to ensure that you make the best decision for your situation when you’re trying to narrow down your options. There are several things that you need to review and focus on before you sign the franchise contract.
One of the most important factors to consider is the level of trust that you have with the franchisor. This is done through open communication. You have to pay close attention to what’s being said and what information is being presented to you. It is common for franchisors to put their company in a favorable light but be wary if you notice anything that seems too good to be true.
Suitability for the area
Before you sign a contract for a franchise, you have to ensure that the area you are in will be able to support it. Knowing the market is beneficial so look at trends in the area. This is also a good time for you to determine what exit strategy you will have. Knowing from the start what plan you have for the business, such as flipping it in a few years or keeping it to hand down to your heirs, can help you as you make the business plan.
Support from the franchisor
The franchisor should provide you with support along the way since you are representing that company. This doesn’t mean that anyone is going to hold your hand. However, many franchisors have programs for new franchisees who are trying to learn the ins and outs of the business. Having these spelled out in the contract can help to protect your interests.
Clear goals and benchmarks
Franchisors usually have specific benchmarks and goals for franchisees that are meant to help them grow the business and thrive. Find out what these are and what type of resources you will have along the way.
One thing that you can ask to see is the financial performance representation. While this gives you an overview of the company as a whole, you can learn a bit about the operating expenses and similar information.
Your franchise attorney should review the contract and any paperwork given to you about the agreement. This gives you a chance to ensure that the support you should get is clearly conveyed in the contract. It is also a chance to find out if there is anything to be concerned about.