20 Mar Why Conducting Research Is Crucial Before Diving Into a Franchise Business
Gathering as much information as possible is crucial before buying a franchise. This ensures you make a well-informed decision. The perfect time to find out if the franchise system is the right one for you or not is prior to handing over the money or signing the contract. There are a few simple things you can do to ensure whether or not you have made an informed decision, such as:
1. Disclosure Document
The Franchising Code of Conduct is a compulsory law that requires all franchisors to provide franchisees with a disclosure document, a franchise agreement and a copy of the code at least two weeks before the franchisee signs the agreement.
A lot of important information about the franchise is included in the disclosure document. All payments that have to be made, whether or not you will have exclusive territory and what happens when the agreement ends is contained in the document. Information about business experience is also provided and whether or not the business is involved in court actions of any type.
2. Former & Current Franchises
Details like the number of franchises that have left the franchise system in recent years have to be provided by franchisors in the disclosure document. The disclosure document will only provide details if the former franchisees consent. It can prove to be useful to investigate why a franchisee left the system.
Question yourself whether you can identify with their reasons for leaving or whether they left for reasons that are not likely to affect you. Speaking with current franchises and visiting their businesses is a great option when researching for a franchising opportunity. Current franchises can help you out by telling you whether the reality of running a business matches the expectation they had when they bought the franchise.
They can provide you with information about what to expect from the franchisor, and whether they have any concerns about how the franchise system operates. A franchise may not be right fit for you if you find yourself identifying with unhappy ex-franchises or unsatisfied franchises
3. Identify Who the Competitors Are
You can find out who a businesses’ main competitors are and how many of them exist by searching a phone directory or even a business. This information is extremely useful. However contacting competitors directly and asking them about their thoughts on the industry that you’re considering to buy can also prove useful.
4. Business Presence & Brand Reputation
Using the brand reputation of the business is probably the most important thing you buy when purchasing a franchise. Rather than starting for the bottom rung, you can trade on the business’s reputation. Conducting some preliminary research to determine how valuable a franchises brand reputation is can prove to be useful. Consider how well the business is advertises. An owner who put in the effort to advertise the business and develop its brand reputation is someone who truly cares about the business and cares about its growth.
Keeping all these aspects in view and being diligent about getting all the information you can about the ranching network is one of the best ways to cover all your bases. When you set out on the right foot, it gives you a good foundation and you are able to find stability in the business much faster as well.
If you want to know more about franchising, feel free to get in touch with us at The Franchise Institute. You can call us on 1300 855 435 or fill in this contact us form and we’ll reply as soon as we can.
Thanks for reading,
The Franchise Institute Team
1300 855 435