Are You Making These 4 Mistakes When Choosing a Franchise?
Aug 26, 2020 11:55 am | Franchising
Investing in a franchise is a big decision that requires a lot of thought prior to signing the contract. With all big decisions, no one wants to make mistakes–especially when they involve your savings.
Here are 4 common mistakes that you need to avoid when investing in a franchise:
Mistake #1 Limiting yourself to the popular franchises
Well-known brands tend to generate word of mouth and brand awareness quickly, without much marketing to be done on the franchisee’s end. However, don’t close off your choices to the brands you’re aware of.
There are many affordable up and coming franchises that have already proven their franchise models work. These brands tend to be more flexible and personal with their franchise arrangements as well.
Mistake #2 Not asking enough questions
Possible franchisees tend to limit themselves to questions about ROI, Turnkey, and location. However, there are more factors beyond these that go into choosing a franchise beyond.
Don’t be afraid to ask the brand about their communication with franchise owners, their after-sales services, crisis management, and other factors beyond cost. Most of the time, these factors play a large hidden role in the success of your franchise.
Mistake #3 Not choosing a brand of interest
Similarly to starting your own business or pursuing a career, you won’t be happy in the long run if you don’t choose a franchise that interests you.
Although it may be tempting to choose a franchise solely on the basis of popularity or cost, your interest in the franchise also determines your involvement and, therefore, the franchise’s success.
Mistake #4 Forgetting the follow up costs
The Turnkey isn’t the only cost that you’ll need to put into your franchise investment. As the business continues, you’ll need to pay for rent, employee benefits, salaries, inventory, and other expenses that go into the creation of every business.
Ensure that, beyond the turnkey, you’re ready to invest more money and run at a loss for a few months of years.
The most common tip given is to do thorough research before investing in a franchise. It’s often said because it’s also the most important. Don’t limit yourself to cost or to the franchise brand representatives. Talk to franchise brokers, consultants, and other third parties before you make your final decision.