Investing in a franchise is serious business and prospective franchisees should be prepared for the commitment. Many believe that “anyone can do it” and that it’s a common tactic to learn on the fly. While some people do take this risk, experts advise four knowledgeable people to be engaged in the process: the buyer, a franchise attorney, a financial consultant and access to the information provided by the American Association of Franchisees and Dealers (AAFD). Membership in the AAFD will help shape the rest of the team by providing information to the prospective buyer as well as referrals for attorneys and accountants. For more on this continue reading the following article from Blue MauMau.
Buying a franchise will be one of the largest (if not the largest) investments you will ever make. With so much money on the line, I’m surprised at just how many prospective franchisees I meet who try to take shortcuts in order to save a few pennies.
There’s a good adage for that: “penny wise and pound foolish”.
If you are seeking to buy a franchise, then it’s in your best interest to assemble a team of experts who can guide you through the rocky shoals of the franchise process. I call this your “franchisee success team”.
I’ve seen too many prospects try and navigate the franchise process by themselves in order to save a little bit of money. Some make it through, but not without getting bruised on the rocks a few times. Many others get delayed or even sunk by poor decisions or poor planning.
Don’t be penny wise and pound foolish. Budget between 2 – 5% of your total franchise investment for your success team, and then start finding qualified team members who can position you for success.
Here’s who you’ll want for your franchisee success team:
- You: This may seem obvious, but you are the number one member of your team. Make sure that you fully participate in the discussions and decisions of your team. Everyone else is here for your benefit, so make sure you listen but also speak up.
- Franchise Attorney: An experienced franchise attorney will review and help you understand your franchisee contract. They’ll be able to explain your rights and point out any areas of potential concern. There’s nothing worse than signing away your rights unnecessarily or making a decision that opens you up to legal action.
- Financial franchise consultant / Accountant: Choose an experienced financial franchise consultant or accountant who specializes in franchises for your success team. This individual can help you determine which franchise opportunities are best suited for your budget. A financial franchise consultant or accountant will also prove useful throughout the franchise setup process, helping you effectively develop a business plan and budget, and generally guiding you to remain solvent so that you’ll have enough funds to give your franchise a real chance of success.
- AAFD: You knew this one was coming, right? The AAFD provides franchisees with connections, educational resources and important discounted services, among other things. Our members enjoy the networking opportunities we offer and our assistance in helping them band together to resolve conflicts with their franchisor. Specially, we provide referrals to franchise lawyers through our Franchisee LegaLine network and referrals to franchise accountants through our FinanciaLine network. For a limited time, take advantage of our discounted membership rates.
Robert Purvin is the Chairman and CEO of the American Association of Franchisees and Dealers, a national non-profit trade association that is dedicated to supporting and protecting the rights of franchise owners.