Having selected a franchise you wish to buy, there are a number of matters to which you have to attend before you can open for business. The following general guide should help you to complete the transaction more efficiently, both in terms of costs and also in terms of your time and effort.
1. Obtain as much detail from the franchisor as possible. Where the franchisor provides financial illustrations, study these carefully to satisfy yourself that the income shown in those illustrations satisfies your needs and requirements but always bear in mind that these are only illustrations and may be optimistic.
2. Whilst reviewing the information supplied by the franchisor, contact your bank manager (if you think you will need a loan) and discuss with him/her whether, in principle, the bank will lend you the money you require for the type of franchise you are contemplating buying. Most banks now operate fairly sophisticated information systems whereby bank managers have access to a central office from which they can obtain detailed information about many franchises, which will enable them to make a decision.
3. If your efforts at stages 1 & 2 above prove to be satisfactory your next step is to arrange for a solicitor, who is experienced in franchising, to review the franchise agreement and advise you on it.
4. If you and your solicitor are satisfied with the agreement see your accountant for advice as to the detailed financial aspects of the franchise. By this time you should have some idea of the sort of premises you will be occupying or your “territory” i.e. your area of operations in the case of a mobile franchise. The franchisor may have produced some financial projections for your particular business, if not, your accountant will help you to put together profit projections etc. and, if necessary, a business plan in support of your loan application with your bank.