Buying a franchise? Do this before signing
Are you preparing to purchase a franchise? If so, you no doubt have your hands full with due diligence tasks, financing chores, planning, and dozens of other time-consuming obligations. Becoming a business owner under the name of a franchisor is a major legal, financial, and personal commitment for anyone, regardless of the line of business or its size. Before signing the official licensing agreement, consider the following points. If you haven’t already completed them, do so before you put your signature on the final franchise contract.
Make a comprehensive checklist
This is actually a step-one task, and chances are that you have at least tried. Most prospective franchisees do it while reading through the document packet for the first time. That’s a good start, but don’t neglect other questions that pop into your head at random, to-do lists you see online for similar franchise opportunities, and anything your accountant, lawyer, or adult family members suggest.
Minimize personal monthly expenses
Becoming a franchisee is a serious step. It’s important to get personal finances under control before moving forward with an agreement. One way, if you currently pay on student loans, is to refinance the education debt through a private lender. Work with a service professional who offers helpful and compassionate customer service whenever you deal with them online or over the phone. Refinancing one or more student loans into a single obligation has many advantages, including the possibility of getting more favorable terms, better rates, and longer repayment periods. Foremost among the benefits, however, is an immediate lowering of your monthly cash outflow. For anyone who’s getting ready to enter a franchise agreement, it’s imperative to get personal expenses down to the bare minimum.
Read the entire agreement and take notes
Even if legalese is not your thing, it is imperative to read the official franchise agreement at least twice. Use a printed, hard copy version so you can more easily highlight and make marginal notes. On the first read, focus on highlighting terms and phrases you don’t fully understand, being sure to use a good online legal dictionary to learn what they mean. The second time through, concentrate on keeping a separate list of questions you have about parts of the agreement, carefully notating the location of passages so you’ll later be able to point them out when speaking with the franchisor or your own attorney.
Ask the franchisor pertinent questions
Schedule several meetings with the franchisor so you can review your questions. Don’t let anything slide, being sure to obtain clear, understandable responses to every query you have on your list, or that you think of on the spot. Be aware of any avoidance or apparent deception on the part of the franchisor and make a note of it. Use this opportunity to also ask questions about operations, or marketing tips as well. Not every franchisor will be receptive to these inquiries but if you are lucky, you can gain some insider info that will be useful once you are on your own. Being able to learn from your predecessor is a valuable vantage point.
Consult an attorney before signing
Bring all your final impressions to your lawyer. Go through anything you’re still unclear about. Review all documents and the wording of the final agreement pages. If possible, work with a lawyer who has experience helping clients who purchase franchises. Don’t skimp on this expense, and do not settle for using a lawyer supplied by the franchisor.