Common Mistakes Made By Franchisees
Franchises are built upon sound business models. However, buying into a franchise does not always guarantee success. As a potential business owner, financial success depends on whether or not you are diligent and avoid some of the common mistakes new franchisees often make.
Commonly, a franchisee proceeds to purchase a franchise without fully understanding the terms in the franchise disclosure document (FDD), the document outlining the franchisee's and the franchisor's responsibilities. This results in later misunderstandings between the parties, such as conflicts in fee scheduling and grand opening dates. If you are thinking about buying a franchise, a good idea is to create a list of questions that arise when you review the disclosure documents. Go over this list with your attorney at a later time. Also, present the list to the franchisor for written clarification to your questions.
Another mistake is failure to contact enough current franchisees. By speaking with other franchise owners, you will be in a better negotiating position because you can compare the offer the franchisor made you with offers made to other franchisees. Contact current franchisees other than those referred by the franchisor. In this manner, you will come to understand both positive and negative aspects of the franchise.
Similarly, franchisees also do not investigate failures within the particular franchise. When contacting other owners, find out what has and has not worked for that business. This will help avoid costly mistakes and may even save your franchise in the future.
Avoid these mistakes by contacting an experienced franchise attorney to set up a consultation.
