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One of the considerations in the statistics is 14% of franchises go out of business in five years. 14% may not necessarily sound like a lot. But I’m sure there are many people that wouldn’t be getting into a car if they were assured that there was a 14% chance of them getting into an accident at that time.
As well, it is also very sad statistic that 50% of all small businesses will fail within the first five years of its conception and inception.
In terms of looking for and buying a franchise, it is the experience and to the advice of CFO services that you must be careful when buying into a franchise. In fact, according to charter professional accountant and Spiro and Associates charter professional accountant, that is the number one thing that they see when people and perspective franchise owners walk in to their business. The prospective franchise owner will walk into the office, they’ll put all of their franchise information down and they will be absolutely 100% sure that that is legitimately the one they want to buy and spend the life savings on.
However what they haven’t done is they haven’t spent time looking into any other options. They have not done their homework, they have not done the due diligence, and they’ve not put their boots on the ground and actually talked to people.
Imagine if, when buying a house, you only looked at one house? That’s it, just one house, that’s the one you’re going to get. That is not necessarily a very prudent decision as you have no idea that there are other houses out there who obviously meet your needs better than the first and only one that you saw. There are so many franchise opportunities out there! You legitimately should take a consideration your family, and your financial and time freedom when you are making this decision. It has to be an educated one! You should look at multiple franchise considerations. Ideally, says CFO services, the recommendation is to look at three different small businesses. This might be three small businesses within the same industry, or from completely three separate industries. If that is the case, then what you should do is look at three different small businesses from within each industry.
You should legitimately then on a piece of paper so that you can legitimately see it and so that it is tangible, put a short list down of three of every three industry. You can then be very objective in your analysis of which industry you want to be in, and which business you want to be a part of from within that industry.
Be careful of wolves in sheep’s clothing! What is meant by that is be careful of people from working from within that franchise!
CFO services stresses the fact that you need a charter professional accountant when you are researching and interviewing small businesses as well as franchises!
Make sure that your charter professional accountant is along for the ride in every meeting that you have with a franchise owner. For example, your charter professional accountant who should have lots of experience with small businesses and franchises, may or may not have information and may or may not have worked with that small business in the past.
Likewise what will happen is if you have your charter professional accountant there with you and the meetings, that particular franchise, whose business it is to sell as many franchises as they can will not simply ask you to put the money down and will not “offer” to do a business plan with you after the paper is signed and the money is handed over.
Likewise, you should be able to do, CFO services states, a business plan with your charter professional accountant, who is impartial, before you make any monetary decisions.
If you do not in fact do this, and you go about that franchise meeting all by yourself, your franchise representative will be very adept at trying to get your money and trying to eat you to get involved with the franchise. Remember it is just another sale for them. They do not have your best interests and your future goals at heart. They will in fact tell you that after you have signed on the dotted line and paid all of your money for your franchise that they will do a business plan with you. However, it may not necessarily be a business plan that you like. What if you don’t like the numbers. What if it comes out not exactly the way that you wanted it to turn out at all? Now what happens is you have spent all of your money and you have signed the contract potentially for a very long term. As well, you probably have signed off on the lease as well. Now you are in it for the long run, and you are in it contractually and very committed. You need to have a business plan before you make any commitment to the franchise owners to see if that particular franchise is the right one for you.
Likewise, says CFO services, you are not at all going to be able to get a good indication of what payroll numbers are until you do some digging yourself or at least your charter professional accountant does the homework for you. The reason for this is because it’s going to be the owners or their families who are not getting paid for all the work that they’re doing from within the business. The owner is probably working double time. And taking out a very menial salary. You are not at all going to be able to replace those numbers that the owner represents.
