5 Things I Did Before Buying a Franchise
Updated: Jan 9, 2019
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Canadian Franchise Journal
Buying a franchise is one of the largest business investments I’ve ever made. It is a big commitment and I wanted to be as prepared as possible for my new life as a business owner. Luckily, I had an inside track with the company from which I purchased my franchise. I previously worked for 1-800-GOT-JUNK? – the world’s largest junk removal company – founded by entrepreneur, Brian Scudamore. The valuable insights I’ve gained into the world of franchising played a huge role in my decision to become a franchise partner with Brian’s moving business,You Move Me. I believed in his vision and wanted to get in on the ground floor so I started looking into markets. That was the beginning of a long process and I learned a great deal along the way.
Here are a few lessons I have to share from my journey to becoming a You Move Me franchise partner:
1. Talk to existing franchise owners
Your best resource are the existing owners in the franchise system in which you are interested. Talk to as many as you can, and don’t be afraid to ask them questions. Things to keep in mind are: “What conditions do you see as threats to your business market?” and “How much support do you get from the franchisor, and how often?”
2. Know your partners
It is important to know the people with whom you are getting into business. Take the time to discuss the various challenges you could potentially face, and create detailed systems that can resolve issues should they arise. The most important factor is figuring out if you can work together. Having a difference of opinion doesn’t necessarily mean disaster as long as all parties have the ability to compromise and remain respectful of different ideas. 3. Research your market
Take the time to undertake a comprehensive analysis of your prospective market. Look at the competitive landscapes, demographics, home sales and employment market. One of the best research tactics is to call similar companies currently operating in the region. It’s amazing how much you can learn just by making a couple of phone calls! 4. Understand the numbers
It’s true what they say – the numbers don’t lie. Take the time to put together an operational budget and revenue projects. Ask your franchisor for guidance on specifics such as COGS (costs of goods sold), royalties, revenue of similar sized franchises and advertising spends. This will ensure you have a handle on how much money you will need for the first year, and how much you will need to attain profitability. 5. Know your support systems
I was at an advantage when it came to understanding the support systems that my franchisor would provide me as a result of my association with the brand in its launch phase and my working relationship with the sister company. I knew the support systems available to me and the amazing results they have yielded so far. Ask your potential franchisor what support they have in place, and with whom you will be working.
When you buy a franchise you are also hiring a large support staff. Be sure to ask for one-on-one time with the person who will be your main point of contact. You are entering into a major commitment with them and their team – you’ll want to ensure that your investment pays off.
The bottom line? Take your time to ensure you are buying into a franchise system that is a good fit for you.