Buying a franchise can lead to success, but there are situations where things can go awry. New franchise owners often make common mistakes that can throw their future plans off track. In the blog post below, we will examine five common errors that franchisees make and how to avoid them.
Mistake 1: Not Looking Into the Franchisor
When considering purchasing a franchise, gathering information about the franchisor, such as reviewing their website and even speaking with their current franchisees, is important. Remember, it is not enough to understand how a franchisor operates. You want to also be able to share the same values and mission. Cultural fit is just as significant as business fit. That is why be on the lookout for warning signs when looking into the franchisor, such as the following:
- Is the franchisor forthcoming about their business practices?
- Is it challenging to get in touch with the franchisor?
- Have you encountered any misleading information?
Mistake 2: Franchisees Believing They Will Be Their Own Boss
It is common for franchisees to believe that owning a franchise will finally give them the creative control they desire. However, owning a franchise is different from starting your own independent company. There are strict rules and guidelines that must be followed. Franchising is built on a proven business model and uniformity rather than freedom. While you may have some flexibility in day-to-day operations, as a franchisee, you are still required to adhere to the franchisor’s guidelines, procedures, and policies.
Mistake 3: Not Doing Thorough Research into the Franchise Opportunity
Many people mistakenly believe that all franchises are a guaranteed solid investment, but this is not always the case. New franchises have the same likelihood of failing as any other small business. For these reasons, it is important to thoroughly vet any franchise opportunities before making a significant investment. Failing to research and investigate these options can increase the risk of investing in a failing brand. However, conducting market research, analyzing financials, and meeting with different franchises will help you make a more informed decision.
Mistake 4: Not Looking into Complaints Online From Other Franchisees
Before entering into a legally binding contract with a franchise organization, franchisees should review what critics of the company say about the business. This information can be found on message boards and forums where franchisees share their problems and offer advice.
Mistake 5: Not Hiring an Attorney
The franchise contract is a legally binding agreement that should not be signed lightly.
However, many people continue to sign franchise contracts without obtaining legal advice on the specific details, even though claiming ignorance will not protect them from the potential nightmare of being bound by the terms of the contract.
That is why, before entering any contract, a franchisee should consider consulting an experienced franchise attorney to help them avoid entering into an unfavorable agreement.
Contact FortmanSpann Today To Learn More About Franchisee Mistakes
FortmanSpann is a highly experienced franchise law firm in the United States, specializing in representing the rights of franchisees at a reasonable cost. Our legal team assists individuals considering the purchase of a franchise by providing them services that include a thorough analysis of all documents provided by the franchisor, evaluation of the franchisor’s financial condition and reputation, and helping clients set realistic goals and expectations. Our goal is to enable clients to make informed decisions by thoroughly assessing the risks and opportunities associated with the franchise.
If you want to learn more about becoming a franchisee or wish to discuss the process, contact FortmanSpann today to speak with our experienced franchise legal team.