Franchise Buying Tips: Purchase Without Passion
Pop quiz: what's the number one rule of buying a franchise? If you answered: meet with the franchisor, go with a popular brand, or read the FDD - you are wrong. The first rule of buying a franchise is this: DO NOT BUY ON EMOTION
Yet that is exactly what most franchisees do. It's good to be enthusiastic about your future business plans. It's bad to fall in love with the deal and let your emotions take the lead. Think that won't happen to you? If you talk to a hundred franchisees you will find that few knew exactly what they were getting into. Most are sensible people with plenty of information who selectively twisted the facts to support an emotional decision.
Give your emotions a cold shower and use this list of safeguards to help you cut through the hype and make an objective decision:
- Do the math – Have your accountant make sure the figures and projections add up.
- Get professional help – Invest in an experienced franchise attorney and / or franchise consultant. Avoid sharing your plans with friends, relatives, and other ‘yes’ people who don’t understand the risks involved.
- Chill out - Be patient and wait for the right opportunity. If you are pressured to make a quick decision, walk away.
- Leave your checkbook at home – You’re most vulnerable to an emotional appeal at that first meeting with the franchisor. Never hand over money before you’ve done your due diligence.
- Be pessimistic – Take off the rose-colored glasses and run a financial model that cuts the sales projections in half, doubles the expenses, and triples the length of time until you expect to be profitable.
- Have an exit strategy – Like a pre-nup, it seems counterintuitive. But you need to know you won’t be stuck if you make the wrong choice.
- There are other fish in the sea – Before you fall in love with the first franchise you see, get information packages from all the other franchisors in the industry and make an objective comparison.
- Beyond the honeymoon – Sure, you’re excited now, but can you really see yourself doing this 20 years from now?
- Buy a proven system or one where the upside is huge Be careful with a franchise with only one unit or a very short business history. Don’t be tempted by an invitation to “get in on the ground floor”...unless the business concept really makes sense.
5 Things Potential Franchisees Need to Prove
There are specific qualities that franchisors look for when they review the applications of potential franchisees. Franchisors more than likely will not invest in someone who may be considered to be high risk. Instead they favor applicants who exhibit characteristics that suggest an ability to manage a business and adapt to their environment to ensure profitability.
Getting into Baby Boomers Wallets
Savvy businesses have been marketing to the Boomer generation for years. But interest is accelerating now that Boomers are approaching their 60s. In this day and age, no business can afford to ignore the economic realities of this phenomenon, with one in three adults currently at least the age of 50. The target audience for these marketing schemes should be adults aged 54 to 64. They have the deepest pockets, with an estimated average net worth of $210,000 -- higher than any other age group.
CAUTION: 5 Things to Avoid with Your Small Business
Idea wealth, that is. Many entrepreneurs are too scared to talk about their new idea because they think that somebody else will steal it! In more cases than not, nobody has the time, energy, resources or PASSION to turn that idea into a reality. Got an idea? Tell people about it! You'll beshocked at some of the great feedback you get.