6/22/2016, Forbes -- Buying a franchise can be a great move for a would-be entrepreneur who doesn’t want to create a new business from scratch. In theory, franchisees acquire a model that already works on every level, from branding to pricing to marketing. A ready clientele eagerly spends on Dunkin’ Donuts, McDonald’s and 7-11. The market has tested the best recipes for glazed crullers, Egg McMuffins and the right combo of energy drinks to stock next to the register. But making a go as a successful franchisee can be a lot more complicated than simply finding an appealing brand and plunking down some cash. For a taste of what can go wrong, see Forbes’ piece about the problems at sandwich franchise Quiznos, which paid $206 million to settle a suit brought by franchisees who claimed the chain had oversold its markets and excessively marked up supplies.
If you’re thinking of becoming a franchisee, how should you prepare yourself? We asked three professionals with extensive knowledge of the franchising world. Ed Teixeira is both a former franchisor and former franchisee, and the author of two books on franchising, including The Franchise Buyer’s Manual. Josh Brown is a Carmel, Indiana lawyer who specializes in franchising, and Sean Kelly is a former executive at the successful Amish pretzel franchise Auntie Anne’s. Kelly runs the muck-raking website,Unhappy Franchisee. They recommend you do these 12 things before you buy a franchise.
- Give yourself a personality test.
- Study the field.
Avail yourself of publicly available information on the ABCs of franchising. An excellent place to start: The Federal Trade Commission’s Guide to Buying a Franchise. Did you know that many franchisees are required to spend a designated amount on advertising and yet have no control over how those ad dollars are spent? Two other helpful sites: The International Franchising Association’s Franchising 101 guide and The American Association of Franchisees and Dealers’ Road Map to Selecting a Franchise.
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