Franchise – Buy a Job Or Buy a Business

How can you make sure you buy a business, not a job? The last thing a buyer wants to do is to jump out of the job pan into the franchise fire. Without proper planning and serious investigation, the buyer can buy themselves a job with very long hours. They meant to buy a business, but they ended up with a job with excessive hours. The cause of this problem is the buyer did not do the homework to correctly understand the business and then plan for the personnel needed to cover the operating hours. In the poorly planned business the owner ends up captive to these uncovered hours. They have in fact bought themselves a job and not a business.

Areas to investigate

When considering buying a business, many potential business buyers are attracted to franchises. They believe that owning a well-known franchise will almost guarantee success. This is not absolutely true, but it does have merit. A food franchise is the most likely business to snare the buyer into buying a job. These businesses always are employee-heavy and always fighting a turnover of personnel. When the employees are absent from work or just non-existent, the owner must step in and do the job. Owners of food franchises must have a very good staff to operate efficiently and without excessive hours on their part. This takes planning, training, and ongoing recruitment of employees. If this is not planned for and built into the budget, this can be a factor that will over time ruin the owners’ passion for their business. The most important area the potential owner needs to know about is the number of people needed to run the business correctly. The franchise people or the previous owner should be able to give very detailed facts and figures in this area. The new owner must make sure the cost of proper staffing is covered in the business plan. Poor planning here can have devastating long-term effects on running the business.

Good employees and good staffing

Food franchises are in need of well-trained employees who are reliable and do the job the way it should be done. A staff that is good at their job is a treasure to have. One that is unreliable and lacking in job skills will be a constant headache for the business owner. This is an area that the franchise should be able to give very good advice to the new owner and also help in the training program. If you are buying a new franchise, this is usually included as it is critical to success. Hiring and training of staff are very important elements of a food franchise.

Training a good assistant is imperative if you ever want to have some time away from the business. With these elements in place, an owner can have days off and even take a vacation in the future. Without the personnel, the owner has bought a constant job with hours that will kill over time. When an owner has a good right hand person available to run the business, this will take a great deal of pressure off of the owner’s shoulders.

Trading Bosses or buying a business

Many franchise owners discover after they have purchased the franchise is that all they have really done is change from one boss to another boss. Many franchise operations are very restrictive and controlling as to what the owner can do when running the business. This includes setting hours of operation, who you can buy supplies from, where you can advertise and what you can advertise. The owner may discover that by contract, they have to participate in an ad that does not seem to work for their location. The answer to this complaint is to know what you are getting into before you turn over your money to the franchise seller. Make sure you understand all parts of the contract, including what you can and cannot do while running your business.

A very smart idea is to speak with other franchise owners before making the purchase. Ask all types of questions including would you do it again or not. Find out what they like and do not like. Find out what their day-to-day business life is like and are their things about it that they wish were different. Listen carefully as to what they like and do not like. It is far better to hear the truth before purchase than after the money has been handed over to the seller. Surprises are likely to be in the favor of the seller and not in the favor of the buyer. Make your own judgment as to whether the restrictions on owners is something that seems fair or just another profit area for the franchise seller.

Read about the pluses and minuses on the Internet

The Internet covers almost all aspects of what a franchise owner is likely to experience after becoming an owner. This and other owners are the best places to find answers from parties other than the seller. This information can be studied and then put into questions to the seller you are dealing with on a franchise. Informed buyers will always make better decisions and also maybe better contracts when making the purchase. Knowing what to look for that is not in your favor helps to keep mistakes from occurring in the deal. Study the prices that other franchises go for and the rational for the prices. This will help ferret out puffed-up prices and numbers that are hard to justify by the seller.

If the answers do not seem to make sense or are still fuzzy when answered, then the potential buyer can make a counteroffer or just walk away. There are good deals in the franchise business, but it is up to the buyer to find then with their own due diligence. Listen to the answers that are given, but then verify for your self.

Conclusions

There are many franchise offers that can be looked at by a potential buyer. The choice depends on the interest of the buyer. Be careful of buying a franchise that you have no passion for, as it will become a very big part of your life. It will help a great deal if you have a feeling for the business. There are large spreads in the prices of franchises for one solid reason. The price depends on what is included and if it is an existing business, how is it doing for the current owner? A high-profit business is certainly attractive if the price is fair in relation to the verified profit. If the staff is solid and the assistant managers are likely to stay, that is another big plus for the business.

Ask tough questions of the current owner like, “Why are you selling?” and “How did you come up with the price that you are asking?” Listen to the answers and verify any numbers that are given as part of the answer. Have your own experts go over the figures just to make sure they are accurate and give a true picture of the business.