Franchise

Reasons you should never buy a franchise – Startup costs

There is always a franchise fee to pay, if a franchisor is giving a franchise away for free then this should set off alarm bells so think very carefully before you sign any agreement.

There are occasionally hidden fees in the franchise fee, there will be an initial fee, then a training fee then you need a starter kit and a call list and headed paper and… the list goes on. Make sure you find out any hidden costs before signing the agreement and its all clearly outlined in your budget.

One thing to make sure that you factor in is the legal fees, these are a must. You must make sure that before you sign any documents you get them checked by a solicitor, you would never consider buying a house without a legal team so make sure you don’t do the same with a business. It’s also worth considering who the solicitor is that is going to look at it, when buying a franchise make sure it is a franchisor solicitor who looks at it not a family solicitor or someone similar, like everything it is a niche and their expertise.

How much working capital will you need to start the business? Not just to get the business up and running but also live on for yourself. I have seen many people start a franchise and forget that they also need to live so they budget and borrow the £10,000 to get the franchise up and running but forget the additional £6000 they need to live on through the first 6 months.

If the franchisor says you need to pay additional costs for the training make sure you know this before you start, most franchise agreements won’t allow you to even look at the systems before you have the training and its similar to the working capital make sure this is budgeted before you begin.

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