In the market for a franchise? Here are 5 things to avoid during the process. 

Buying a business is an exciting step towards working for yourself.

Here are five things you shouldn’t do when buying one:

1. Believe the franchisor will cover the hard yards

One of the perks of selecting a franchise system is that in most case you’re backed by an existing brand, granted a site and have access to the administrative and marketing support of that business.

Yes, the franchisor has done all the hard work, and knows through trial and error what has worked for the brand, and what hasn’t been a success.

As a franchisee you are leveraging that knowledge, but that doesn’t mean the business will run on its own. And if you go in with that expectation, you’re in for some disappointment.

2. Expect guaranteed success

There really is no such thing as a guaranteed success, so be wary of franchisors who advertise this.

Picking a franchise model with the support mechanisms in place is a good start. But each franchise unit requires the right location or territory that can deliver customers, appropriate rental costs, a process for sourcing or attracting clients and a committed franchisee.

And that will only get you started.  You are likely to receive assistance with your business growth from the business development or area manager, but you also need to be on top of your profit and loss and cashflow.

3. Make decisions based on emotion as opposed to fact

You’re in love with the concept and passionate about joining the network. That’s great!

But have you checked out the financials?

• Are you confident in the business model for your chosen location?

• What is the game plan if you decide to take time of later down the track or want to sell?

• Is the concept the right fit for your personality and skills?

It’s integral to conduct detailed research, rather than relying on what the franchisor tells you. You need to make sure you’ve done your homework on the franchisor, the potential of the sector and any market trends.

4. Assume the finances will take care of themselves

Buying a franchise is a major personal and financial investment. You want to exit your business with more funds than you have spent on the business but it’s not uncommon for franchise buyers to miscalculate the costs upfront.

Have you considered all the costs for legal and accounting fees, paying tax and superannuation, any registration fees, leasing costs, insurance? Check with the franchisor what costs will be coming up over the term of your agreement (new equipment, store refresh) to prepare yourself.

You will need enough working capital to see you through the early days, weeks, months.

5. Cut corners with your due diligence

Experts that specialise in in franchising can provide valuable insights drawn from their years working with franchise agreements, understanding relevant legal documents as they will be able to reference court cases and case studies that have set precedents.

While it is important to have the support of your friends and family, they may not fully understand the implications of buying a particular franchise.

Similarly, turning to your family lawyer or an accountant will give you some feedback on the purchase but not specifically for franchising.

Of course it can set you back to get good advice – but it costs more to make a mistake that results in a bad business decision.