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Franchises are not for everyone. If you're someone who wants things done your own way all the time, you may be frustrated if you buy a franchise and need to do things a set way. Be aware of what requirements there are to running a franchise and make sure you are comfortable with them. Make sure you evaluate the franchisor carefully. Some are better than others.
If you just buy a franchise without careful research and due diligence, you might buy into a weak franchise that doesn't support or train you well and your income and growth potential will be severely hampered. When an existing franchise is for sale, investigate it carefully. If you have a lot of business knowledge and background, you might be better off starting your own business rather than buying into a poorly researched franchise.
* Before you invest in a franchise for sale, do an inventory of your skills, interests, goals and budget. Ask yourself:
• Do my abilities and skills match up with the needs of running this particular franchise?
• Can I afford to buy a franchise in this industry with my budget?
* Numbers, numbers, numbers…add them up:
• If you're looking at an existing franchise for sale, have an accountant look over the numbers with you. If the franchise for sale would require multiple investors, consider partnership options and whether or not you would feel comfortable with them.
• You will need to factor in employee salaries. For example, if you're going to buy a franchise that requires a manager to run it, make sure that the costs involved (salary, etc.) are fully accounted for in your budget. And, if the franchise requires expertise in an area you are lacking, make sure you have the funding to hire people possessing the needed skills and know-how.
In addition to the usual fees, structure, and support inquiries you should take into consideration before purchasing a franchise, you should also check into the background of the franchise business for sale. Decipher how many franchise owners it has had. Note that a number of owners over a short period of time is probably a sign of some business difficulties (either in that particular location or within the franchise as a whole).
Visit the locations and observe the way they conduct current business. If it's a franchise with repeat customers, talk to some of them. Also take the time to talk to the current franchise owner about the training and support they have received from the parent company. Compare the numbers with other franchises for sale. Make sure you hire an accountant to review the books of the franchise business for sale.
There are several franchise business directories offering lists of franchises for sale. These are a convenient way to do some initial research and learn what's involved with buying a franchise. You can typically sort by category (industry, investment, etc.).
Many directories have useful, insightful articles to help you make informed decisions when you go to buy a franchise. Read as much as you can and take notes on the different franchises for sale.
Bringing in an accountant to examine the books of an existing franchise for sale is very wise. Unless you have a detailed accounting background, get referrals from friends and business owners you trust for a qualified accountant who has some experience in business evaluations.
An accountant will review the franchise's financial statements and help you understand them. They can also help you develop a business plan. You might want to get a Dun & Bradstreet report on the franchisor. Your accountant should assess the earning projections made by the existing franchise for sale and help you understand the assumptions on which they are based.