Looking to Buy a Franchise - 6 Big Mistakes to Avoid


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For those looking to buy a franchise, it can be a very difficult decision. There are common mistakes prospective franchisees make that can be avoided if they are known in advance. This presentation helps wanna-be franchise owners avoid six big mistakes.

To read the original article, you can find it at: http://www.cafranchiseopportunities.com/buy-a-franchise/.

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Looking to Buy a Franchise - 6 Big Mistakes to Avoid

  1. 1. ArticleLOOKING TO BUY AFRANCHISE?Six Big Mistakes to Avoid!by Daren Coudriet Canadian Franchise Opportunities www.CAfranchiseOpportunities.com
  2. 2. SIX BIG MISTAKES TO AVOID So, you’re looking to buy a franchise and you are wondering where to start. One of the most important principles you need to adopt is “learn from the mistakes of others”. There is no need for you to go into this blind and repeat someone else’s mistakes. Page 2Canadian Franchise Opportunitieswww.CAfranchiseOpportunities.com
  3. 3. SIX BIG MISTAKES TO AVOID Mistake #1: Follow Your Passion This one may seem strange at first. After all, aren’t you supposed to follow your passion? Isnt that what everyone’s says, "do what you are passionate about"? Here’s the twist - passion is great and it is sometimes the only thing that separates you from failure, but to succeed in business, you need a passion for starting and running a business. Here’s an example to help explain - say you have a passion for golf and your friends and family encourage you to follow your passion. That’s great, but there is a huge difference between becoming a professional golfer and starting a golf retail store. In this case, striving to becoming a professional golfer to fulfill your passion for golf makes perfect sense. On the other hand, starting a golf retail franchise store would be a recipe for failure. To succeed in running a retail store, you need a passion (and experience) for retail operations, not golf. Page 3Canadian Franchise Opportunitieswww.CAfranchiseOpportunities.com
  4. 4. SIX BIG MISTAKES TO AVOID Mistake #2: Buying the “Hot” Franchise It’s amazing what crowd mentality (following the herd) can do to a person when making a decision. It is easy to fall into that trap where you think just because everyone else is buying it, it must be the right franchise to buy. But you must be careful to avoid that way of thinking, for a couple of reasons: 1) The franchise could be today’s fad and it may not stand the test of time. You need to ask yourself, does it have what it takes to be a success 10 years from now? 2) It may be a good fit for others and simply not a good fit for you. It is possible you do not fit the franchisee success profile and where others succeed, you would fail. Believe it or not, this is a common problem -- a franchisee evaluates the franchise, but not themselves. Take the time to do your homework and choose the right franchise for you. Page 4Canadian Franchise Opportunitieswww.CAfranchiseOpportunities.com
  5. 5. SIX BIG MISTAKES TO AVOID Mistake #3: Overestimating the Franchise Model If you are thinking that you will buy a franchise and simply because it is a franchise it will be easy to start a business, think again. I have heard franchisees say, “ but I thought I just had to follow the formula.” Yes, you will likely have to follow the processes, system and procedures outlined by the franchisor, but succeeding in a franchise is much more than that - you need to know how to run the business. While a franchise can help you avoid many mistakes you may have made otherwise, succeeding in a franchise business can be just a challenging as starting any other business. Make sure you have what it takes to succeed in business and the right franchise will help to improve your chances of success. Page 5Canadian Franchise Opportunitieswww.CAfranchiseOpportunities.com
  6. 6. SIX BIG MISTAKES TO AVOID Mistake #4: Underestimating Costs & Capital When starting a new venture, business owners are often very optimistic, sometimes too optimistic when it comes to estimating the costs of getting a business up and running. Often times the capital needed to keep the cash flowing until the business generates it on its own, is underestimated. In the planning stage of a business startup, often a business owner tends to over estimate the success of the business. The result is that they don’t have the liquidity needed to get them through the first two or three years, the critical startup years, and the business fails due to lack of capital. Page 6Canadian Franchise Opportunitieswww.CAfranchiseOpportunities.com
  7. 7. SIX BIG MISTAKES TO AVOID Mistake #5: Not Conducting Franchise Reviews This is simply the case of not doing your homework. You can’t simply talk to a franchisee or two, just to check the task of the list. You have to do more. You need to not only talk with the franchisees provided by the franchisor, but you have to do some of you own investigative work and find other franchisees that are not on the “preferred” list. Make sure to talk with franchisees that are in areas or own territories of a similar demographic. Franchise reviews are one of the most important activities you can do when evaluating a franchise, if you do it right. Page 7Canadian Franchise Opportunitieswww.CAfranchiseOpportunities.com
  8. 8. SIX BIG MISTAKES TO AVOID Mistake #6: Lacking Sales & Marketing Skills So much of a local business’s success today depends on lead generation. The life blood of any business is the ability to target and secure customers in their local market. The level of assistance provided by franchisors in the area of local sales and marketing varies greatly, but at the time of writing this article, it is typically the responsibility of the franchisee. I fully expect franchisors to begin centralizing this expertise and offering local marketing services to its franchisees simply because of the specialized expertise needed. However, you need to evaluate what the franchisor is providing for you today. This is one of the areas that can make or break your business. You may have the best product or service, but if customers aren’t finding you and are choosing your competition over you, it is not going to matter. Page 8Canadian Franchise Opportunitieswww.CAfranchiseOpportunities.com
  9. 9. SIX BIG MISTAKES TO AVOID Summary In summary, when you are ready to buy a franchise, learn from the mistakes of others and avoid these mistakes: Following Your Passion Buying the “Hot” Franchise Overestimating the Franchise Business Model Underestimating Costs & Capital Not Conducting Franchisee Reviews Lacking Sales & Marketing Skills Do you homework and do a thorough franchise evaluation to increase your chances of finding a franchise that is a good fit for you. Page 9Canadian Franchise Opportunitieswww.CAfranchiseOpportunities.com