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Opening a franchise can be both exciting and lucrative. In some cases, individuals are excited to get started and often rush through the process. Unfortunately, there are several common pitfalls that tend to trip people up on their way to opening up a business. Avoiding these mistakes will make a franchise stronger financially and encourage stability.
Not Seeking Out Legal Advice
A business requires all types of documents and disclosures and a franchise is no different. Some individuals assume that they understand the ins and outs of business and they do not need the help of a legal professional. This tends to lead to problems down the road.
An attorney can explain the disclosure document to the potential franchise owner. If there are questions or concerns about anything it entails, the attorney can follow up and make sure that there is a complete understanding between both parties. The franchise agreement is another document that must be understood by the franchisee. When something doesn't make sense or some clarification is necessary, the lawyer can document all changes.
In most cases, it is a good idea to keep an attorney around for other issues that will arise from the opening and operating of a franchise. This person will continue to explain complicated documents and laws that will affect the business and make suggestions on how to handle each situation.
Not Doing Enough Research
There is probably more than one franchise open somewhere nearby. It is important for a franchisee to visit these other locations and examine how they work. Look at each one from the perspective of a customer and a business owner. This is a more accurate picture of how things are going to be run on a day to day basis that any conversation or paperwork provided. While there, consider asking the franchisee how things are going and request information about his or her experiences with the franchise overall.
Many potential business owners assume that they know what they are getting into. They don't take the time to do any research and, in the end, they tend to miss out on valuable information and perspective from others in a similar situation. How is the most recently opened up franchise doing? Are there any franchises that have been in business for an extended amount of time? It can't hurt to find out what successful franchises are doing right to maintain their success and how a franchise failed.
Research is about more than just the franchise. A person also needs to look into the current market and see how successful the business can be. Market research provides valuable information that can help make the decision of where a franchise should be established and how much success it can expect in the first few years and into the future.
Lacking Financial Opportunities
There is no doubt that opening a franchise without the right financial situation can be detrimental. Not having enough working capital to bring a franchise to its knees in no time. A business owner must be able to apply for financing and keep meticulous records along the way to ensure that his or her franchise is successful. Just like having a lawyer available for help and assistant, a good accountant can be just as valuable.