Home Digital Marketing 10 Things You Need to Know Before You Buy a Franchise

10 Things You Need to Know Before You Buy a Franchise


For a would-be entrepreneur, starting a business from the ground up is often their only goal, but how about buying a franchise?

Not everything has to start from scratch. Buying franchise companies can turn out to be a great move for an entrepreneur. On paper, a franchise is a model that is already functional at every stage, including production, distribution, finance branding, price point, and marketing.

A loyal buyer wouldn’t think twice about purchasing a meal from highly reputed top franchises like KFC, McDonald’s, or Burger King. These existing franchises have already done their research on the market, decided on the best recipe for the burgers, fried chicken as well as the perfect offers and discounts to provoke the buyer into making an impulse buy.

But there is more to purchasing a successful franchise than looking for low-cost franchise opportunities and throwing cash at it. If you are flirting with the idea of becoming a franchise owner, you should prepare yourself for the task. But how, you may ask.

Fortunately for you, we are here to answer that. Read on for the top 12 things you need to do before you invest your money on a franchise.

Take a look in the mirror

Military veterans have often been very successful franchise owners, and that is no coincidence. Veterans of the military are used to playing by the rules and functioning within a carefully regulated model. On the other hand, if you are more of a free-thinking creative individual, it is going to be challenging to be a franchisee. To be a successful franchise owner of saying a fashion store, you should be an implementer, not a creator.

Do your research on the market

Make use of all the available information on the basics of franchising. This guide by the Federal Trade Commission is a great place to start. Many franchises have rules requiring them to spend a set amount on advertising and other aspects. Additionally, refer to the guide by the International Franchising Association for more information.

What are your strengths?

How comfortable are you with cold calling? What about business to business sales?

Take, for example, Teixeira who owned Vehicle Tracking Solutions, which specialized in selling tracking devices to truck businesses. Due to its tech mambo jumbo, many tech-focused franchises perked up their ears. However, most of the tech enthusiasts hated sales which is the most crucial aspect of the franchise, and as a result, it failed.

This is an excellent example of why you need to analyze if your personality matches the franchise you are planning to invest in.

Is it a restaurant? If so, how well versed are you in foodservice and kitchen management?

There is a general assumption that a franchise is a business within a box, but the reality is far from the case.

Count your cash

When presented with new business opportunities, many make the mistake of only looking at the minimum needed to purchase a franchise. This is generally advertised as the franchise fee plus the price for the equipment.

But, to get a franchise running, you will need to invest in a lot of marketing and endure some rough months breaking even or incurring net losses before the business can pick up. The situation is the same, also if it is a well-known franchise because customers will first need to know about the new location.

According to Teixeira, most companies factor in three months of expenses, but it is recommended that you factor in six months.

Be wary around franchise consultants

Many so-called franchise consultants are paid salespeople who are merely looking to sign you up for a deal as soon as possible. This is because they receive a significant commission out of the deal, often fifty percent of the franchise cost. Request for all the financial details upfront and as clear as possible.

Do not fall for the Great Franchise Lie

There is a very popular stat about franchises; only five percent of franchisees fail. That is hardly the case. According to data from the Small Business Administration, franchises fail at about the same rate as other businesses. Sixty-six percent of companies last for two years, and fifty percent make it for five. Still, many franchise owners love to brag about the higher failure rates but don’t fall for it.

Look for dirt

Use sites like Sean Kelly’s Unhappy Franchisee to your benefit and look for any drawbacks of the decision on your mind. Kelly’s site featured research into the New York Bagel Cafe and its high closures – although this has been disputed by the company. Many similar sites report on the franchise industry, and it’s worth taking a look at them before pulling the trigger. Most successful franchises have a clean record, and that is a sign of a transparent and robust company.

Comb through the Financial Disclosure Document

The Financial Disclosure Document often runs over fifty pages but do read carefully through the entire document. The above guide by the Federal Trade Commission offers advice on how to tackle it. The Financial Disclosure Document holds a ton of information on topics like bankruptcy filings, lawsuits, training methods and other costs that might not be visible on the surface – HQ might want you to do special promotions or give out freebies.

The good old cost vs. benefits analysis is a necessity

Divide a piece of paper into two columns and note down the benefits on one side. This can be the brand name, established market share, and the design of the outlet. On the other column, note down the costs such as the franchise fee, marketing fees, and the royalty fees. Ask yourself if you could hire a consultant to help you through it all and if you can avoid paying royalty fees and such.

Start your franchise with XIMIVOGUE, one of the most profitable franchises right now

With over 7000 products in its catalog and 1500 stores scattered over the world, XIMIVOGUE, also referred to as Ximiso, has solidified its position as a top international clothing store. The successful franchise business is now looking for new franchise owners, giving you a chance to become a franchisor with a leading franchise store. XIMIVOGUE is well known for its low investment costs, making it an excellent option for first-time franchisors looking to leap into the world of franchising. Ximiso’s presence in 80 countries across the globe, including the US, is a testament to its guarantee of success and brand recognition.

Find out more details about this franchise brand at https://www.ximiso.com/.


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