The Franchisee

Cautions for Franchisees
Some of the cautions for the franchisees are:

  1. Make sure you obtain legal advice.
  2. Make sure you talk with your accountant before proceeding.
  3. Explain to the franchisor your expectations so everything is clear before you go ahead.
  4. Have all statements verified.
  5. Keep everything in writing. Ask for any representations outside of the agreement to be put down in writing so that you can have this on record.
  6. Other franchisees. Always talk to other franchisees and see what they feel and think about the franchise.
  7. Make your own checks – find out the reputation of the franchisor and how successful they have been over the years.
  8. Look at agreements – make sure all agreements are fully examined and passed through your legal representatives before signing.
  9. Disclaimers – check any disclaimers that are in the documentation because you want to know what the franchisor would accept no responsibility for.

Checklist to Ask Yourself
Here are some of the fundamental questions that you need to ask yourself before you proceed to purchase a franchise.

  • Am I prepared to put in the necessary hours to make this business succeed?
  • Is my family prepared to support me and the time I have to spend in the office or factory where they may not see as much of me as they would like, in the first few months?
  • Would this business provide me with the amount of income that I need to maintain my current lifestyle?
  • Would my age permit me to run this business efficiently?
  • Do I have enough experience in business matters to be confident of running the business?
  • Am I prepared to follow to the letter a manual that has been developed by someone else?
  • Do I want to use some of my own creativity in the business or would that be a problem because a franchise generally does not allow me leeway to develop my own ideas?
  • Can I accept guidance and direction from someone else?
  • Do I have the ability to mix with other people?
  • Is my financial position strong enough to enable me through the first year without relying on the success of my franchise business?
  • Does the franchise have a good name and public image?
  • Am I confident in employing and managing staff?
  • Am I comfortable with the amount of money that I have to borrow to purchase this business?
  • Have I a plan in place in case it takes longer for the business to produce a cash flow that would meet the payments on the loans?
  • Do I have the necessary educational background to lend itself to this type of business?
  • Am I confident in running the business long enough in order for me to recover my investment?
  • Do I actually want to be in this type of business?

Features to Look for in a Franchise
Look for these things:

  1. An established franchise system that has a good name and record of success.
  2. A good relationship between the franchisor and other Franchisees in the group.
  3. That the franchise runs under ethical business practises. This can be proven by talking to existing Franchisees.
  4. That the franchise provides full training for the owner and employees.
  5. Exclusive – that the franchise provides exclusive territories. This is important so there is no competition with other Franchisees.
  6. That there is a good spirit of cooperation and goodwill between the franchisor and Franchisee. That is, the partnership is one that would work.
  7. That the franchise produces a type of business that you could happily put your name to and be proud of.