Part 1 - Top 10 Franchise Mistakes to Avoid

We are going to talk about the top 10 mistakes to avoid when looking at franchising. My name is Tracy Rickman,? I'm a franchise consultant with FranNet. These are so important. We're going to split it up into parts one and two. Here we go with part one.

Mistake number one, and closely followed by mistake number two, choosing a franchise because of the product or service. Many times people come to me and say, I want that franchise because they always have a line around the block; there’s a line out the door. And man, do I get my food Jiffy fast? But they need to look at the business the right way. The success strategy we want you to look at first and foremost is choosing a franchise based on your skill sets. What is it that you want to do? What are you inherently good at??

Mistake number two, look at the role of the owner from the function of the franchise. You don't want to be yelling the fries up every day. Find the skills that you really enjoy using.

Mistake number three, picking a business from a passion, something we're passionate about, or think that the business has to fit our personality. Success, the way we want you to look at it, is the vehicle to get you to where you want to be, hit your goals, and have the lifestyle you want. That's where the real passion for your business comes from. That's what gets you up at five in the morning to make the donuts because you love eating donuts or you love the lifestyle that affords it, not because you want to get up at 5:00 AM every morning. Remember, separate the passion from what you want to do in the vehicle that gets you to your success.

Mistake number four thinking that you need to have a partner. People often look at franchising or business ownership and get scared and feel they can mitigate that by bringing someone else to the table. But what you need to do to be a successful business owner in a partnership is plan out all those things ahead of time. Like the documentation, you need to have a buy-sell agreement, including the funding for the buy-sell agreement, if something happens. You want to look at voting rights, who can vote, and what happens when you guys disagree. Who's the operating partner? And are both of those roles the same? And do you have enough capital to grow that business in the next steps? Or do you take the money you make each month and pay yourself a salary? Really look at that business’s growth and always remember the golden rule. Do unto others.. .? Make sure that your partnership will stand the test of time.?

Mistake number five that I see many times is that people look at the documentation they get from a franchisor called the FDD or the Franchise Disclosure Document, and they take that as a Bible instead of a great stepping-off point. They rely on something called item 19 or how much money that can be made. While those numbers are accurate, they're most often an average of all the franchisees in the system. It doesn't allow you to know exactly how your business will run and how much money you will make. Success strategy, what we want you to do, is get the blank proforma, fill out the? fields, and then talk to franchisees and validate that so you know how you're going to grow and how your investment will continue to provide the income you want.?

Stay tuned for the next five. My name is Tracy Rickman, and I'm a franchise consultant with FranNet.