Checklist to Review Before Purchasing a Franchise

If you are a novice business person, it might be tough to begin on your own. Cashing in on franchise opportunities can help you to learn from others’ experience. Furthermore, the franchisor can mentor you all along the way. With this type of help, you’ll reduce the chances of failure!

The business world in Miami Beach, FL,is brimming with franchise opportunities. How does one choose the most promising opportunity? Some franchisee opportunities may also turn out to be sour. You may not get the expected results. Before moving forward, apply the same diligence as you would while investing elsewhere.To protect your investment, take the time to review and consider the details carefully.

Franchise Purchase Checklist

• Franchisee cost: Each franchisor has a franchise fee. See if the initial investment suits your budget.

• Additional costs: You may need to purchase equipment, lease space and so forth. Work out the math to check the feasibility.

• Restrictions on suppliers: Some franchisors allow franchisees to make their purchases from only a restricted “list” of suppliers. To avoid future losses, check the quotations of other suppliers too. You will then understand the profits/losses incurred in the deal.

• Regional protection: Ensure that the franchisor guarantees you regional protection within your area. If he sells more franchisees within the same radius, you will suffer from limited customers and tough competition. Confirm the period of the guarantee too.

• Franchisor’s focus: Your business will grow with the franchisors business. It is better to check the franchisor’s business interests first. Is he or she just expanding a brand name or interested in growth? You will grow only if the franchisor prospers!

• Wing expansion: If you can expand your wings into multiple outlets, you can enjoy your own economies of scale and multiply your business exponentially. Check the level of expansion you are entitled to.

• Franchisee turnover: Understand the franchisee turnover of the franchisor’s business. How many new franchisees have joined the company? How many franchises have been sold? You should check if the franchisees have been successful. Sometimes, franchisees are sold at higher prices, which are better than the investment. In these cases, the franchise may be running successfully but sold because of other reasons. Thorough research about the franchisee turnover rate and the sale prices will give you a complete picture.

• Legalities: When you are considering franchise opportunities, a smart solution is to hire the services of a franchise lawyer. He or she can educate you about the points that the franchisor probably forgot to highlight. Other lawyers may not be helpful in case of rules governing franchisees. A franchise lawyer is the best choice. As laws vary from state to state, you need to choose one from Miami to set up a franchisee here.

• Financial performance information: If the franchisor has not mentioned his or her financial performance information, then something is under wraps. Assess the financial performance information to understand a prospective business. See if the franchisor’s net worth is more than your investment. If it’s not, then the deal is not worth it.

• Exit strategy: What are the rules if you want to end the agreement? Can you sell your franchise? Are there any charges levied for the same? Will you be able to step out, if the need arises? Clarity on these points is essential.

Extensive research is needed before making a choice. However, this route is better than faltering later. Exploring a franchise opportunity involves one of the biggest financial decisions of a lifetime.