Want To Buy A Franchise? Be Prepared For The Vetting
Buying a franchise should not be a spur-of-the-moment purchase — for either the franchise company or the prospective franchisee. Each party has a stake in knowing as much as possible about the other before going into business together. Are you ready to buy a franchise? Let's find out...
Related: Ready For A Career Switch? Consider A Franchise
When you buy a franchise, you get a business partner. You want them to add as much value as you. And it's up to both parties to thoroughly check each other out before signing a contract that binds you together. Typically in a franchise agreement, the franchisee agrees to pay an upfront fee, as well as continuing fees that include royalties and costs for advertising and marketing. What the franchisee should get in return is a tried-and-true system for running a profitable business, as well as training and ongoing support to help you learn your new business and become an expert at operating it. Your responsibility includes reading as much about the franchise company as possible, consulting many experts along the way, including a franchise coach, and, as you get closer to a purchase, a franchise attorney. In turn, the franchise company executives will be getting to know you. After conducting several interviews, they will arrange for you to visit their company headquarters for a “Discovery Day." During these early conversations, it is up to the franchisee, to interview the executives right back. Find out what you need to know about their track record and their system to see if it's right for you. Many franchise companies contract with outside vendors to use specialized online questionnaires meant to assess the skills and suitability of the prospective franchisee for this particular franchise. Franchise companies typically pay a fee for the service, and they get a substantive way to test the skills and experience of prospective franchisees to see if they are a good match to their company. For Greenville, S.C.-based ARCpoint Labs, if prospective franchisees don't score high enough on the test they use by Franchise Navigator, they generally do not move forward in the process, said Randy Loeb, vice president of franchise development for the company, which offers drug, alcohol, DNA and forensic and wellness programming. Not all companies use these programs as elimination rounds, but prospective franchisees should view these vetting exercises as best for everyone involved since no one wants to put their hard-earned savings into a franchise business for which they are not suited. The mutually beneficial investigations help ensure new franchisees can thrive, so that by the time they purchase a quality franchise, they've optimized their odds of success.
Disclosure: This post is sponsored by a Work It Daily-approved expert.