Since 2012, franchising has been growing in popularity. Now, thousands of people invest in a franchise every year in the United States. While some owners will go on to make a significant amount of money and find substantial career success, others wont be a as lucky. However, there is a trend among those unlucky franchise owners. Franchisees that don’t succeed often miss the red flags when it comes to purchasing and running their business. All too often, franchisees write a check and dive into ownership before they really know what they’re getting into.
If you are interested in franchising, keep an eye out for these red flags that should catch your attention and make you think twice.
For example, when you receive the franchise contract you shouldn’t feel rushed or pressured to sign. In fact, a quality franchise will encourage you to seek a lawyer and have them go through the entire document with you. This contract could bind you to the business for years, so its important that you are comfortable with it and what it requires from you. If you feel that the franchise is pushing you into signing or trying to convince you to sign without legal counsel, there could be cause for concern.
In reality, none of the franchising process should be rushed. From introduction to signing of the contracts, you could easily spend four to eight weeks. Knowing this, you now know how ridiculous it is for a franchise to expect you to sign a contract after one or two conversations. If you do feel pushed by the franchise to get on board, you may want to look into another option. If the franchise representatives are pushy now, they are likely pushy throughout your entire contract. Or worse, they will push you into a contract and then leave you out to dry once your check has been cashed and you have signed the contract buying into the business.
Another sales tactic used by not-so-reputable franchises is dropping pricing for the upfront franchise fee right off the bat.
It’s a lot like companies that are “always hiring,” if they need to continually reduce their pricing its either too high or they need bait to get franchisees. As much as your budget should be considered when entering a franchise agreement, the business and culture should play a major role. If you experience any of these red flags during the franchise purchasing process, you might want to reconsider or just spend a little more time thinking. When you find the right franchise it will feel right without pressure or a timeline. If you feel informed, supported and motivated without seeing any red flags – you may have found the right franchise.