Buying a Franchise: The Realities You Might Learn Too Late
You have good reasons to buy a franchise than starting your own brand in Colorado. Established franchises have proven to succeed, so the risks should be less. They already have loyal customers, so marketing should be less challenging. There already have policies and procedures in place, so the process of trial and error should be out of the equation.
All these points hold true — but only to some extent. Just because you purchase the right to sell the products and services of a well-known brand doesn’t mean your venture would be an automatic success. That’s not how it works. And this kind of perception is actually naive.
To avoid learning them the hard way, be aware of the following before reality bites you along the way:
Franchising Contracts Are One-Sided
Franchising may be a business agreement between two parties that share the same goal: to generate profits and make the brand more profitable. These is true, but remember that your franchisor is also out there to make money from you. Apart from the end-consumer, you’re also a customer in the eyes of the brand owner.
As you sign the contract agreement, Miller & Steiert, P.C. says you must make sure it’s fair and reasonable for you. More often than not, franchisors would draft contracts that are all advantageous to them. Once you put your signature on the dotted line, you’re legally bind to follow whatever’s stated there.
This is why you need an experienced business attorney to check your contract first. Your ignorance of the contract’s provisions can be used against you.
Market Research Can’t Be Done Overnight
If you think your initial marketing plan is ironclad, then it’s probably not. It’s never enough to study your location and competition at one glance, as you’re most likely to see the market just at the superficial level.
What works for one branch might not work for another. Not all fast food, ice cream, and coffee franchises have the same exact formula for success. You may tweak your strategy a little bit to make your store adapt to the market you wish to target.
Failure Is a Big Possibility
Again, buying a franchise doesn’t guarantee your venture’s success. Your franchisor would familiarize you with the ins and outs of its operation, but, in the end, its fate still lies in your ability to run it.
Not all franchisees have what it takes to become real entrepreneurs. Franchising is a great option to grow your wealth, but don’t be ignorant to the risks that come with this business model.