We love talking to people who are contemplating the leap to small business ownership. And this time of year is especially busy!
These conversations remind me how daunting the task is for franchise buyers. There are so many great franchise options from which to choose and so many personal factors to consider.
Over the many years of helping people navigate this process, some areas and questions definitly stand out as important.
Here are our Top 10 Questions to ask yourself during franchise due diligence:
- Are you passionate about what you’ll be selling? Business ownership is hard work. You need to love it.
- What do other franchisees say? Ask them about their average day and the challenges they’ve faced.
- Is there a market locally? Research the industry. Talk to potential customers in your neighborhood.
- Can you make a mistake? Successful business owners try something new, learn from it and adjust as they go.
- Are you getting value for the royalty? Ask franchisees about the systems and services provided after opening.
- Is the business model financially viable? Review Item 19 of the Franchise Disclosure Document with an advisor.
- Do you have working capital? You need the financial resources to open with some cash in reserve.
- Can you build and lead a team? Managing employees well is a crucial part of running a successful business.
- Is the business recession proof? Ideally, your product or service is needed in good and bad economic times.
- Can you sell down the road? It’s important to consider your long-term vision, including a viable exit strategy.