Rick Bisio, franchise consultant, spoke to aspiring entrepreneurs at a meeting held in Tampa, Florida. He discussed franchising as he focused on researching and purchasing existing franchises. The first tip Rick gave the group was, “Be discreet; most sellers will not broadcast that the business is for sale. This is positive for you and for the seller. Selling a business takes time and it is in everyone’s best interest if the employees and customers do not spend time concerned about “what ifs.”
Rick explained his system for researching a franchise; study the franchisor, meet the owner, call other franchisees, explore external changes, learn about the employees and examine the physical plant.
“It is important that you study the franchisor, as this is the person you will be signing a long-term contract with, not the seller,” Rick said. “If you are satisfied that this franchise will conform to your skill set and fulfill your financial and lifestyle needs, then it is time to meet with the owner. Find out why he/she wants to sell and ask to see the history of the franchise’s financial performance. The seller should be happy to supply balance sheets, income statements, tax returns and other financial statements.”
Rick recommends calling other franchisees in the business to learn more about the possible downsides, as it is unlikely that the seller will readily disclose this information. “You must execute your due diligence to discover if there are internal or external problems that will make the business undesirable. Visit the area Town Hall and inquire if any large projects are slated for the area where the franchise is placed. These types of projects can be positive or negative; it is helpful to know what is happening in the area.”
