Questions You Should Ask Before Closing a Franchise Sale
Posted on November 10, 2010 by My Franchise Law
Deciding to buy a franchise can be an exciting time, with visions of profits and independence dancing in your head. However, before you get too far into the purchasing process, there are several key questions to ask yourself before you make your move. Here’s the rundown:
- Where will the money come from? Do you have the money necessary to purchase a franchise, and if not, where will you be getting your financing? Also, will both you and your spouse be working within the franchise during its start-up phase, or will one of you keep your current occupation in order to ensure a continual flow of cash?
- How much money do you have set aside? It’s important to have enough money left over in your savings account after paying for the franchise to leave yourself a cushion to keep your business afloat. Some businesses can take longer than others before you will see profitability, and many don’t break even until a year or more after opening.
- Can you and your family handle the physical and psychological stress that can come from owning a franchise? This can include much longer work days than a regular 9-5 job, knowledge and work in all areas of the business from cleaning and chores to paperwork and management.
- Can you remain committed? Is this business venture something you and your family can remain happily devoted to for several years, if not longer? Franchises can be challenging, even when they’re running smoothly, and if you don’t enjoy what you are doing it will become much more difficult to show up for work each day with a positive attitude and willingness to continue to grow your business.
- Have you done the research? Do you know your potential business inside and out? Have you spoken with other franchisees to see if they are happy with their purchase? This is your time to do some detective work, so get out there and gather as much information as you can to feel confident in your purchase.
- Have you consulted with a franchise lawyer? Before signing anything, it’s important to have a franchise lawyer look over all of your documents to ensure you are getting the best terms possible in your contract. They will also be able to point out any problematic areas in your agreement, saving you from unforeseen expenses or unfavourable terms.