Franchise

5 Biggest Mistakes To Make When Buying a Franchise

We’ve seen these simple mistakes crop up time and time again. Make sure you’re aware of the pitfalls and make sure you’re educated on how to avoid these mistakes before you purchase your franchise.

1) Lack of research
2) Rushing in
3) Thinking you can run it as an independent business
4) Not learning how to implement the systems
5) Thinking this is a get rich quick scheme

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1) Lack of Research

This first big mistake is simply, not doing the proper research. We are a cleaning franchise and during COVID-19, we’ve turned away more prospective franchisees than we’ve taken on. This is simply because they haven’t done the relevant research. We’ve had people come to us and one of the first questions we always ask is ‘Why do you wanna get involved in a cleaning franchise?’ And the number of times in the last six months we’ve heard ‘Because we think it’s gonna make a lot of money right now’, is astounding. Just because you think it’s gonna make a lot of money right now because of the current economic situation, doesn’t mean that you’re gonna still enjoy it in 12 months, 24 months or 72 months. You’ve gotta do that research into the business. You’re gonna be tied into these franchises for a minimum of five years. Make sure it’s a franchise you can still love in three, four, five years time.

2) Rushing In

The second biggest mistake is once people find a franchise, they just dive straight in. They wanna pay their money and get going. This isn’t always the best case. It’s always worth speaking to other franchisees. Never let the franchise put you in touch with people. They are only ever gonna put you in touch with their best people. You should independently pick some franchisees to ask. Go on to the franchisor’s website, they’re gonna have the territories that are operational. Pick three or four, reach out to them, speak to the franchisor and say, “I want to spend a day with these people.” If they say no, then that’s a red flag. If they say yes, great, go and spend some time. Ask them what it’s really like. Ask, ‘what support do you get from the franchisor?’

3) Thinking You Can Run Run It As An Independent Business

Mistake number three is thinking you’re gonna be able to run it as an independent business. You can, to a certain extent, but there’s always gonna be restrictions in place. From where you can trade, the products you can use, to how you communicate with clients. Make sure before you step into that franchise you’ve had these hard conversations. What happens if I go outside my territory? You don’t wanna be there and because of a mistake, get that territory taken off you or your franchise closed down. You’ve gotta be very, very clear that you are being part of a smaller part of a big company. There are pros, there are cons. Focus on the pros of this. A smaller territory’s been created for a particular reason. The franchisor will have done the research into why that should be a territory. They know it’ll work, they know the business is there and they will give you all the tricks, tools and tips of how to go and find those clients.

4) Not Learning How to Implement The Systems

Mistake number four is not learning how to implement the systems. The franchisor will have spent a lot of time, a lot of effort getting these systems correct and how they work. Now, if you come in and try and do your own thing, you’re not fully utilising what you’ve bought into. The franchisor will have the system of how to go out and find those first clients. It’s important that you spend the time, learn and ask questions if you’re not sure. Don’t do it gung ho, focus on the systems. Ask the questions, make sure you know the next steps you need to take to get those clients and to start making yourself money.

5) Thinking This Is a Get Rich Quick Scheme

And the final mistake people make is they think it’s gonna be a get-quick-rich scheme. It’s not. I’ve never seen one work that way. You might get lucky and get a big client in your first week. The budget they will have built out for you is gonna be fairly accurate. Therefore, it’s not gonna be a get-rich-quick scheme. Have a look at the data that they’ve given you, how much money are you gonna be turn over in the first year? Is that realistic? Are you gonna be able to live off that money?

They’re the five biggest mistakes to look out for when buying into a franchise. Think very carefully, ask those hard questions and never be afraid if it’s not right for you to be honest with the franchisor.

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