Top 10 Mistakes Made by First Time Franchise Buyers

I’ve helped many people in their search for the right franchise for them. Often I encounter them after they’ve tried to conduct a search on their own. Listed below are some of the most common mistakes I hope you can avoid.

Believing Everything Published on the Internet

While there’s good useful content about a franchise on the Internet, a more reliable source of information is the Franchise Disclosure Document which is governed by the Federal Trade Commission. There are legal implications for the franchisor for providing incorrect, inaccurate information making this an authoritative document provided by the franchisor.

Not Considering Your Exit Strategy First

It’s very important to consider what your personal situation might look like when your franchise agreement expires. Will you renew your agreement, or will you sell your franchise? Do you have someone already in mind to succeed you as the owner? Many questions to consider before you ever sign your franchise agreement.

Asking Only the Obvious and Relative Questions

Because you probably have never purchased a franchise, maybe all your questions are relative and obvious. Should you choose to work with me, I’m prepared to share a collection of questions I’ve compiled over many years to help prepare you and ensure you get answers to all the important questions.

Not Understanding the 20-60-20 Rule

This simple rule encourages you to take a look in the mirror to determine if you are a 20-60-or 20 individual? In a franchise system there are always 20% who are performing the best, 60% who are performing average and 20% who are the bottom performers. I seek to work with individuals who feel they’ll be in the top 20% in a franchise system. My reputation as one of the top franchise consultants in the U.S. is predicated by my “quality over quantity” of referrals to franchisors. I never refer anyone who indicates to me they simply want to be average.

Forgetting It’s a Mutual Assessment. The Franchisor and You Both Get a Vote

As you explore a franchise opportunity it should be a 2-way street of communication. You should have an equal opportunity to converse. It should never be a situation where the franchisor does all the talking and you don’t get to ask questions and vice versa. You need to make the time to explore the opportunity equally and mutually.

Being Either Too Analytical or Too Intuitive

Being overly analytical or intuitive often leads to “analysis paralysis”. It’s acceptable to dive into the information, however don’t get stuck and dwell on the information. Trust the franchisor’s mutual discovery process timeline to help you know when it’s time to proceed toward their next step in the process.

Not Defining or Understanding Your Unique Buyer Values

This is very important. Maybe you have a very good idea of what you think your buyer values are; however how do you know for sure? When you choose to work with me, I use tools and technology to help us mutually uncover and discover your buyer values. Once we identify them all, I’m able to match you with the best opportunities financially and culturally.

Not Compiling a Team of Advisors in Your Decision Making

Would you have a medical procedure performed without consulting with a team of advisors or experts? No. The same philosophy applies to purchasing a franchise. Surround yourself and leverage the expertise of individuals to help you assess the opportunity and launch of your franchise. I have relationships and access to the some of the most experienced minds in franchising. Whether it be legal, financing, accounting, etc. I can introduce you to the best and most qualified.

Going with the Least Expensive/Cheapest Royalty Business

When considering how much is too much or too little in royalty payments you need to assess the following statement. Does the value the franchisor brings to the table equal or exceed the amount I’m paying in on-going royalties? If you feel the value isn’t there, then perhaps that franchise is not for you. If you can see the value, then you’ll never be concerned with the royalty amount the franchisor is charging.

Allowing Others to “snatch your dream” Without the Facts

If you’re someone who can’t stay on pace with a franchisor’s discovery process and you frequently revert to “analysis paralysis” there’s a very good chance another candidate could snatch your dream. It’s important to stop and reflect. However don’t be afraid to ask for clarification from the franchisor to assist you in moving forward toward your own dream.