3 Questions to Ask Before Buying a Franchise
Whether you are buying a business or a burrito, it’s important to know what you’re buying before you buy it. I realize that purchasing a new franchise can be a big risk financially, but it can also really pay off later, whereas buying a burrito has very limited financial risk upfront, but it can really cause problems later. And we move on…When looking to buy a new franchise, you must invest the time needed to carefully analyze the Franchise Disclosure Document provided to you by franchisors and to call at least 10 franchisees to get their candid feedback about the franchise business model and the answers to the following three questions:
How Much Total Investment Does the Franchise Really Cost?
Make sure to do your due diligence and to ask existing franchisees how much it really costs to launch a successful franchise. Most potential franchisees greatly underestimate the marketing and working capital costs needed to launch a successful franchise. You must not let your infatuation with the franchise concept or the idea of owning your own business blind you to the real numbers associated with launching a successful franchise.
Is This a Franchise That I Can Believe in 100%?
When you buy a franchise, you are buying a proven turnkey business model for the purposes of obtaining a vehicle that will help you get to where you want to go professionally, personally, and financially. If you buy a franchise without having total faith in the brand that you are buying, then you will not diligently implement the systems. If you only commit to implementing 50% of 80% of the franchise systems then your business will be designed to fail from the very beginning.
Is This a Business Model That Will Work if You Do?
When you start a successful business, you have the potential to become financially free in a way that very few people know. However, for your franchise to become an asset of value and not an endless expense and perpetual money loser, you must be prepared to be responsible for your own success. In the world of entrepreneurship, you cannot play the victim game or the blame game, whether the business succeeds or fails, is entirely up to you. Thus, you need to be 100% sure that the business model you are investing in will work if you do. Before you make that big investment into a new franchise, do your homework. Ask the franchisor and the franchisees listed on the FDD (franchise disclosure document) the tough questions you need answers to. Remember, Napoleon Hill, the bestselling self-help author of all time was correct when he wrote, “The successful leader must plan his work and work his plan. A leader who moves by guesswork, without practical, definite plans is comparable to a ship without a rudder; sooner or later he will land on the rocks.” Don’t guess. Do your due diligence. Clay Clark is the Founder of Thrive15.com, which offers online education for entrepreneurs taught by millionaires, mentors and every day business success stories. Clark was Oklahoma’s U.S. Small Business Administration Entrepreneur of the Year, and has been the speaker and consultant of choice for Maytag University, O’Reilly Auto Parts, Hewlett Packard and countless other small and large businesses around the world. He is the author of four books and is a business partner of NBA Hall of Fame basketball player, David Robinson.
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About Clay Clark
Clay Clark is the CEO, Show Host and Visionary of Thrive15.com. Clark has been a U.S. SBA Entrepreneur of the Year, a Metro Chamber of Commerce Entrepreneur of the Year, and the U.S. Chamber National Blue Ribbon Quality Award Winner. As a business consultant, entertainer and educator his clients over the years have included: Hewlett…