WHAT ARE THE RISKS OF BUYING A FRANCHISE?

Like starting any business, buying a franchise involves risk. Although most franchisees are satisfied and successful, some do suffer financial losses.

That’s why you must be particularly wary of any company that “guarantees” profit or certain success. If you hear a claim about a company that sounds too good to be true, it probably is. Investigation of all earnings claims made by a franchisor is especially a best practice. It’s important to understand that while franchising provides a proven model, great results only come from diligence, execution and hard work.   Success or failure ultimately depends on you.

To help mitigate the risks of buying a franchise, studies show that successful franchisees:

  • conduct their own marketing research and due diligence
  • use their own financial and legal advisors
  • develop thorough marketing and business plans
  • have prior experience or learn to understand the industry well

Be sure to ask these questions before starting a franchise.

 

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