Purchasing a franchise

By admin
06 August 2013

Many people enter the franchising business without knowing what it is they are getting into. Jeremy Lang gives some tips for potential franchisees

Know the industry: Choose a franchise in an industry that you are familiar with, as this industry knowledge is an important tool for searching and evaluating business opportunities.

Choose within your budget: Calculate what you are able to afford. This amount should include the finances you are able to raise, save and will be able to borrow.

Review the franchisor: The first two steps should dramatically narrow down your search and allow you to focus on a particular franchise.

Speak to franchisees and ex-franchisees: This is probably the most important exercise in the process. A franchisor should be able to give you a fully updated list of franchisees and ex-franchisees, as well as their contact details.

Investigate the location: Suitability of the location of your outlet, or, in the case of non-retail franchises, the area in which you are going to operate in, is key.

Get the value calculation right: Ensure you are not overpaying for the franchise outlet that you have in mind, whether it is a new or existing one.

Get legal advice and knowledge: The franchise agreement the franchisor will give you to sign is a crucial document detailing the rights and obligations of you and the franchisor.

In the end, it depends on you: The strongest franchise brand can still fail, but with the correct leadership and management this can be avoided. Just like any other business, operational and cash-flow management needs to be realistic.

Visit www.businesspartners.co.za for more information.