Whenever I attend a franchise trade show, I always have franchise purchasers ask who they can turn to for advice about buying a franchise or researching a franchise. I tell everyone that there is no “list” of people that they must work with, but I do recommend that they discuss the franchise purchase with several different people which include: family and friends, a financial advisor or accountant, a franchise attorney, the franchisor and franchisees, and possibly a franchise consultant or broker.
The next question is always, “What can these people do to help me?”
Your family and friends are your foundation. A person’s family and friends can give great insight into a person’s personality and skillset which can sometimes better enable them to find the right franchise. Additionally, family and friends will be there to celebrate in the good times as well as help or listen in the bad times.
A financial advisor or accountant is always a great asset once you have your business up and running. Financial advisors or accountants have the skillset to help organize and maintain your financial records, make sure you stay compliant during tax times, and ensure that you are keeping track of your return on investment.
Many times the last person called, a franchise attorney can assist you with understanding the franchise disclosure document, the franchise agreement, and any other agreements that you may be signing on behalf of the franchise. Additionally, franchise attorneys can assist with creation of a legal entity such as a corporation or limited liability company so that the purchaser can have separation of liability between the franchise and their personal assets. Franchise attorneys can also assist with negotiating the franchise agreement, if warranted or possible.
As suspected, the franchisor and its franchisees are a great source for information. You should always ask the franchisor and its franchisees as many questions as possible so that you are comfortable before you buy the franchise. When speaking with the franchisor and its franchisees, you should ask if anyone in the franchise has ever had similar circumstances to those you are having such as build out, cost, and local marketing. The franchisees in particular are a great resource for obtaining information about your general concerns about the franchise agreement or the relationship the franchisor has with its franchisees.
Last, but not least, are franchise consultants or brokers. If you are unsure what franchise you are interested in, talking with franchise consultants or brokers is a great first step. By working with a franchise consultant or broker, you have the opportunity to learn more about what type of business will work best with your mindset and goals. Many times, you will be exposed to industries that you originally had zero interest in but upon further inspection these opportunities may help you reach your goals in business ownership.
Although the above is not an exhaustive list of all the advisors that you could seek out, nor is it an exhaustive description of the services offered by each group of advisors, seeking out and talking with advisors who are familiar with the franchise industry is an incredibly beneficial step when you are preparing to buy a franchise.