Purchasing a franchise is an exciting opportunity that can lead to financial success — as long as you go about it the right way! If you avoid a few common pitfalls, you may have a better chance of making the right investment and growing your franchise business. To provide you with some guidance, our team at Franchise Legal Support has provided a list of some of the most common mistakes made by prospective and new franchisees.
Here are the key franchisee mistakes to avoid:
- Skimming the legal paperwork - Ensure you fully understand your disclosure document and franchisee agreement
- Doing it alone - Failing to consult with an experienced attorney before signing the dotted lines can lead to problems later
- Skipping the franchisor research - Research the franchisor and its business, including the business model, the company’s history of performance, past legal issues, etc.
- Not researching your local market - Market research is crucial for choosing the right location and gaining the right customer base
- Not talking to other franchisees - Learn about their successes, failures, issues of concern, and overall experience working with the franchisor
- Ignoring funding issues - Ensure you can fund the investment and that you are not underestimating the future costs of running the franchise, such as royalty fees
- Overestimating your independence - Understand the various business factors that are actually controlled by the franchisee
When it comes to investing in a franchise, it all boils down to doing your due diligence and making informed decisions. In addition to doing your own research, you should also make sure to consult with an attorney who truly understands the franchising industry.
Reach out to Franchise Legal Support
At Franchise Legal Support, we can help you understand the franchise model and review all the paperwork, including your disclosure document and franchise agreement. We can also represent you in all franchise-related negotiations both now and in the future! Call our office to learn more about how our Los Angeles franchise attorney can assist you.