Are you ready to purchase a franchise? Have you conducted your research? Be sure to avoid these common franchisee mistakes!
- Unrealistic expectations
- Not doing your research
- Not speaking with current franchisees prior to purchase
- Not reading and/or not fully understanding the FDD (Franchise Disclosure Document)
- Believing that other franchisees are competition
- Believing franchising requires little to no work
- Not imagining failing
- Unrealistic expectations:
As with anything else, going into something with unrealistic expectations can be a recipe for disaster leading to mass disappointment. It is important to understand all the benefits of purchasing a franchise, and becoming a franchisee, but it is also important not to go into it blind, and to understand how a franchise works, first. It is important to understand that there are systems, and ways of conducting your business under a franchise’s brand. There is a legal document you will sign, and within this document there are certain guidelines you must follow as a franchisee (more on this to come later). For most who purchase a franchise, they understand this, and this is likely one of the reasons they chose to take the franchising route, but for those that did not do all the research, the systems may be alarming, and feel overbearing later in your business. A good franchisor should also help to manage your expectations, but overall that responsibility is your own.
- Not doing your research:
Prior to purchasing a franchise, there is a lot of research to be done. This research is not only on the potential franchise you are thinking of purchasing but also the franchise industry itself. As mentioned above, what exactly does it mean to be a franchise? Are you interested in following systems, and brand cohesiveness, or does your personality more resemble that of a “rule breaker” and someone who prefers to do things their own way? If you’ve established that you’re interested in following proven business systems, and franchising is for you, from there it is time to research the actual brand you are considering.
- Not speaking with current franchisees prior to purchase:
A huge part of this brand research is speaking with existing franchisees. It is likely that they had all the same questions you do now, prior to launching their location. There is no better person to help answer your questions, and address your concerns, than someone who has been in your shoes. Asking them about franchisor support, and their successes and failures as a franchisee can be great insight and information to consider strongly during your research phase.
Not reading and/or not fully understanding the FDD (Franchise Disclosure Document):
An FDD is a legal document which is presented to prospective buyers of franchises in the pre-sale disclosure process. This document is lengthy and often complex for franchisees. Hiring a professional legal presence to review the FDD with you, prior to signing, is extremely important. The FDD is not a document that can be skimmed and read quickly. If you do not read this legal document in its entirety and understand it fully, prior to signing, there may be some unexpected surprises down the road.
- Believing that other franchisees are competition:
A great aspect of being a franchise is the relationships and comraderies you have with other franchisees. When food franchising, it may be harder to not see other locations as competition, because their storefronts are often close by. However, with the trades (especially The Brothers that just do Gutters) our service areas are very large, and do not overlap. Within a franchise system, leaning on and seeking advice from other franchise locations can be extremely beneficial and rewarding. It is important to remember that each division’s success has an impact on the entire brand’s success.
- Believing franchising requires little to no work:
A system with business practices, and training proven to work, right? Yes, this statement is correct, and likely one of the reasons why you chose the franchising route, but just because a brand has been established with proven business practices, does not mean that your work here is done, or that being a franchisee is “a piece of cake.” Being a franchisee, is still being a business owner and it takes a lot of work, especially initially after launching. When first opening your franchise, expect to put in a lot of hard work and extra hours to get your location up and running.
- Not imagining failing:
This may seem a bit negative to imagine failing prior to even opening, but it is something that needs to be considered. If your family, home, investments, etc. cannot physically survive failing, now may not be the best time to begin your journey as a business owner. There is always that possibility of failing, and the added pressure of “failure not being an option”, although a great motivator, can lead to you making decisions that may not be the best, out of desperation. Of course, having a large financial cushion isn’t all that common, and this does not mean that you need to be extremely comfortable financially prior to purchasing a franchise, but your overall financial situation does need to be considered in depth, and a plan should be put into place prior to making the leap. Remember, a positive outlook is key, but so is being realistic!
Overall, purchasing a franchise has a long list of benefits, and can be the perfect fit for many aspiring business owners. It is important, though, to make sure you do your research, and understand how a franchise system works in general as well as how the specific one works that you are interested in, prior to signing the FDD. The Brothers that just do Gutters has a unique franchise model that keeps the “small business mindset” while functioning at a franchising level. Interested in learning more about our franchise system, and unique business model? Contact Ken Parsons, our Head of Franchise Sales!
