Basics of Buying a Franchise Business

As an entrepreneur, you may find it hard to start your business from scratch and build it to success. However, it doesn’t mean that you can’t invest in other ventures and let your money work for you. Thus, you can invest in a business model that has been tried, tested, and overcome the market challenges.

The good thing is that you can sell well-established products or services from a brand that has cemented market recognition. Investing in a franchise is an added advantage for you as an entrepreneur with minimal business experience. You may consider buying an existing business, but a franchise is well established and has minimal investment risks.

Buying a franchise doesn’t mean just the products and services but the whole trademark with proven marketing strategies and business operations. A franchise has a higher success rate since the business model is successful at all levels and has an existing customer base that highly recognizes the brand. You don’t need any experience to run the business, but you can learn how the model works.

That said, here are some tips to consider when buying a franchise.


Start by doing your homework to learn more about the business you’re buying into and the industry niche. Go through the publicly available information on the basics of buying a franchise. Determine how buying into the business benefits you as an entrepreneur or a small business owner.

Franchising allows you to get into a licensed relationship with an existing and well-established business. Thus, take time to research the contract terms and license boundaries and ensure you have a lawyer present to go through all the documents. Your research may help you unearth any issues that other franchisees have had with the franchise.

Check for any lawsuits against the franchisor to determine the reasons for the lawsuits and who won the case. Talk to other franchisees or franchise managers and owners to know your expectations and whether it’s a good idea to buy into the business. This way, you can learn about the franchise’s business model, design, and financing.

Know Your Strengths and Weaknesses

It is imperative to know whether your personality matches the business under consideration. You may have issues with sales which makes it hard to manage a business. Also, you may know less about customer relationship management, and you may need an associate to handle that line of the business.

Don’t see the franchise as one business box or a golden goose since the chances are that you may flop. Experience is the best teacher, and it would be best to invest in a business you know about. Assess your strengths and weaknesses or ask those you trust to help you point them out.

Determine the Franchise Fees

Consider whether there are any initial franchise fees and determine hidden fees such as advertising and royalties. Check whether the franchise has disclosed all fees and if your agreement protects you from such fees. This way, you can determine whether you have to contribute to advertising costs at regional and international levels.

Beware of Franchise Salespersons

Franchise consultants or salespersons are paid to ensure that you sign the deal quickly. Thus, they may avoid giving you all the franchise information by sweeping the franchise dirt under the carpet. Their work is to aggressively market the franchise and entice you to take the deal.

Ensure that you buy the franchise after finding out all relevant information or agreement terms and avoid being sold the franchise. Explore various franchises and compile a list of potential franchises to research about and compare critical issues conclusively. The franchise consultant should not do the selling as you have to shop for options before making the final decision.

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