Greetings franchisees, or franchisees-to-be,
If you read the last blog and you have decided that you are going to listen when you call people for due diligence, then you need to have some questions written down to ask the experienced franchisees.
First, the franchisor can't tell you how much profit you will make. That varies a lot depending on many variables. It will be up to you to buy materials, pay employees, control general expenses etc, so corp doesn't know how much profit you will make. That will be up to you. So, ask the people that have been in business a few years about their profit. Does that number include paying themselves? What all are they including in their expenses?
Second, call EVERYONE in your region. Call the ones that have been in business a year, 10 years, EVERYONE. It is good to call people all over the US, but concentrate on the people who will be closest to you.
Three, ask to spend a day with a franchisee in your area. All day. If it isn't part of the buying process, then do it anyway. If it is a store or resturant, just hang out there observing. If it is a business where you can't go inside, like a Maid Service, then keep asking owners until you find someone who will let you.
I will write more on this, but due diligence is very important. I have had franchisees that wish they hadn't purchased a franchise and when I ask them what kind of due diligence they did, they always say that they called a few people that were on a list of franchisees that the company gave them. Do you think that list is going to have people that are struggling, or disenchanted, or going out of business?
If you were going out to buy a house and a car and other large purchases, wouldn't you make sure that you have checked out everything, asked other people, and done everything you can do to make sure that all that hard earned money is going into a good investment?
Why wouldn't you do at least as much when buying a business?
Fran
Showing posts with label Franchise buying advise New or Transfer existing?. Show all posts
Showing posts with label Franchise buying advise New or Transfer existing?. Show all posts
Thursday, February 14, 2008
Monday, February 11, 2008
Franchise Buying- New or Existing Business?
Potential franchise buyers,
I was reading some threads on a franchise forum site and found questions about buying exisiting franchises vs. opening up a brand new location. One question was whether or not there would be training and support if they bought an exisiting franchise.
I can tell you that where I work, there is just as much training and support for someone buying an existing as a new. If the franchise you are looking at buying doesn't provide the training or support, I suggest you buy something else. Just because it is an existing franchise doesn't mean it is following the business model, has all the equipment you need, doesn't have everything in perfect working order to the point you don't need to know how to fix it, etc. You don't know how any existing employees were trained and what they have been up to.
I have dealt with many transfers and many new franchises and while buying an exisiting franchise can be easier, it can also be harder. If you buy a business that has been around for 5 years, maybe they did things the right way the first couple of years, but now that you are buying it they have developed many bad habits. Maybe their equipment is in bad shape and after you buy the business someone like me will show up and tell you that it needs to be replaced.
What kind of reputation has this business built up? What do past customers tell their friends about this business? Are you buying a good or bad reputation?
Opening a franchise from scratch can be hard, but you learn as you go. Everyday you have to learn a few new things and before you know it, you have a thriving business. The new owner stepping in now needs to know everything at once. They don't have time to learn on the go like the owner that has 10 customers, then 50, then 100, then 200. You are buying 500+ customers and are responsible for employees that know much more about the business than you do.
If you buy an existing franchise, you better have just as much training and support as the franchise owners. Believe me, you will need the encouragement, advise, wisdom, experience as much as anyone.
Fran
I was reading some threads on a franchise forum site and found questions about buying exisiting franchises vs. opening up a brand new location. One question was whether or not there would be training and support if they bought an exisiting franchise.
I can tell you that where I work, there is just as much training and support for someone buying an existing as a new. If the franchise you are looking at buying doesn't provide the training or support, I suggest you buy something else. Just because it is an existing franchise doesn't mean it is following the business model, has all the equipment you need, doesn't have everything in perfect working order to the point you don't need to know how to fix it, etc. You don't know how any existing employees were trained and what they have been up to.
I have dealt with many transfers and many new franchises and while buying an exisiting franchise can be easier, it can also be harder. If you buy a business that has been around for 5 years, maybe they did things the right way the first couple of years, but now that you are buying it they have developed many bad habits. Maybe their equipment is in bad shape and after you buy the business someone like me will show up and tell you that it needs to be replaced.
What kind of reputation has this business built up? What do past customers tell their friends about this business? Are you buying a good or bad reputation?
Opening a franchise from scratch can be hard, but you learn as you go. Everyday you have to learn a few new things and before you know it, you have a thriving business. The new owner stepping in now needs to know everything at once. They don't have time to learn on the go like the owner that has 10 customers, then 50, then 100, then 200. You are buying 500+ customers and are responsible for employees that know much more about the business than you do.
If you buy an existing franchise, you better have just as much training and support as the franchise owners. Believe me, you will need the encouragement, advise, wisdom, experience as much as anyone.
Fran
Subscribe to:
Posts (Atom)