Do solid research

2011-07-16 07:18

As with any business venture, there are always unscrupulous people waiting in the wings to take your hard-earned cash.

There are many franchises that make money simply out of selling the franchise to an entrepreneur and offering little back-up or continued support. You need to look for a franchise that makes money if you are to be successful.

Anita du Toit of Franchising Plus says franchisers are now legally bound by the Consumer Protection Act to provide a disclosure document.

This is similar to a prospectus and should provide all the information regarding the franchise opportunity, including contact details for existing franchisees and financial projections.

If the franchiser you are investigating does not have a disclosure document, proceed with caution.

One of the best ways to research is to speak to existing franchisees and ask them questions about the franchiser’s support.

Find out what’s gone wrong, what’s gone right. Ask franchisees if they’d buy the franchise again. If not, ask why not.

Fouche says a good starting place is to draw up a list of franchise opportunities that interest you and visit the
franchisers. Ask them to show you around and to provide you with additional information. Every bona fide franchiser will be happy to give you as much information as you want, and more. Many franchisers will even invite you to spend a day or so at one of their units.

Should you come across a franchiser that is less than forthcoming with information and tries to rush you into signing a franchise agreement – beware. Franchisers worthy of the title will be as keen as you are to ensure a good fit.

Pressurising you into making a decision you may regret could indicate that the franchiser is more interested in your upfront fee than in building a sustainable network.

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