What to Avoid When Purchasing a Franchise

Being our own boss is considered to be one of the pinnacles of financial and personal freedom. There are plenty of ways of going about that, one of them is buying franchises. Doing that starts of exciting and exhilarating. Anyone that has been doing this for a while knows that after the initial phase comes stress and hurdles. There are many things to consider at every point of the way. If it were easy, everyone would own multiple franchises. It is easy to get overwhelmed by this complicated process, especially for newcomers. Buying a franchise is not as simple as walking into a store and making an everyday purchase. It is an investment that can mean the difference between fulfilling a lifelong dream and losing all of our money. Here are some of the most common mistakes one can make when trying to buy and manage a franchise and how to avoid them.

1.  Market and research

Not understanding the current market by not doing the research prior to taking action is number one on our list for a good reason. It is the base, the foundation on which we build or break everything that comes after. Going for a trendy, but an unpopular and irrational product or service that only we care about is the most common mistake to make. We have to get intimate with the market and its needs. Is our idea going to have a solid customer base? Is there a need for this business at this time and place? Is it going to sell well and in adequate quantities to keep us going? And if all of the boxes are checked, is that going to change in any foreseeable time? Yes, some people treat such companies as hobbies and passion projects, but in order for it to succeed, it is not enough. So, we need to do our due diligence and research all the market aspects to the best of our abilities.


2.  Networking

When buying a franchise, people talk to everyone they already know. Their family, friends, lawyers, workers, etc. And there lies the problem, the most important people to talk the ones that already own the franchise we are thinking about opening. Who else knows that business better than the owners themselves? They can provide us with invaluable insight into all of the aspects of franchise ownership, market, customer behavior, etc. we can use that to make our decisions. The sooner we start talking to these people the better as we will acquire more knowledge that we can use. Failing to do so can cost us dearly, especially in the beginning.


3.  Exaggerating the independence part

People go into the franchise business because they want to be their own boss. Although it can be achieved to a point, it is impossible to do it absolutely alone. Franchisors expect their franchisees to follow all the predetermined rules and expectations. It is the very essence of a franchise to follow strict guidelines in order to retain the original customer experience and product or service quality. Franchisors know their systems and their processes better than anyone else. It is like joining the military, we agree to follow orders from the high up. There is a degree of autonomy, but the rules are clearly defined. Let’s say that you want to buy into a tea making franchise like the Chatime Franchise. As all franchisors, they will expect you to use their blends and recipes along with additional requirements such as customer relations and such. Just something to note if strict independence from all external factors happens to be your priority.


4.  Running before learning to walk

Tying into our previous point, as a franchisee, our job is not to reinvent the system and the process. Rather it is to follow it. We have to learn how to implement the process and follow the training programs given to us by the franchisor. They want to see all of their franchisees succeed, but also do not want to dilute their brand. It is important to implement these systems before opening multiple units. And yes, it is possible to have multiple units of the same brand as well as different ones. It is best to show our competence by solidifying our first franchise rather than immediately opening multiple ones. It will show our franchisor that we are serious, dedicated, and committed. If we do the opposite, we can surely expect some backlash from the franchisor.


Buying a franchise is not for everyone. It means certain things that not everyone is comfortable with. But for those that decide to make that commitment and see it through thick and thin, the rewards can be great. If we do our homework, invest carefully, follow the prescribed model, and work hard, the sky is the limit.


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