(The previous page of this article summarizes the advantages and disadvantages of buying a franchise.)
The Franchise Application
The first step in buying a franchise is to contact the franchisor operating a franchise that you’re interested in. Usually when you express an interest, the franchisor will expect you to complete a questionnaire or application form.
Do not be surprised that the franchisor’s questions include detailed questions about your finances. A franchisor will want to know about your personal assets, for example, because he or she wants to make sure you have a fall-back position to carry the business in case it runs into financial difficulty.
You will probably also be asked about your spouse’s financial situation. Once again, the franchisor wants to be sure that both of you are prepared to make the financial commitment necessary to start and run the franchise successfully.
You’re also sure to be asked questions about your experience, background, and even aspirations, questions designed to help the franchisor determine whether or not you’re the kind of person he or she feels will be able to run the business successfully and fit into the franchise model.
This second point is especially important to franchisors, because successful franchises depend on the uniform application of the system they have developed. They do not want people that they view as too independent, or people who are going to “gum up the works” because they can’t resist experimenting or applying their own ideas.
The Interview
If you “pass” the questionnaire or application test, the next step is usually a meeting with the franchisor that you can think of as a job interview. The franchisor will continue to explore your interest, commitment and suitability; you, on the other hand, will be trying to find out as much as possible about the franchise.
The Franchise Contract
If the franchisor decides you are a suitable franchisee, you will be offered a franchise contract that lays out the obligations of both parties. You should seek legal advice about the contract and go over it carefully. Like any other contract, some aspects of it may be open to negotiation. And like any other contract, if there are any promises made about the franchisor/franchisee relationship that are not in the franchise contract, get them written in.
Is Franchising For You?
Is there a franchise in your future? Buying a franchise is like buying any other kind of business in that you have to do your due diligence and investigate the franchise fully. However, if you are the right sort of person for a franchise operation and pick the right franchise, being a franchisee can indeed be the fast track to success.
