Common Mistakes to Avoid
Once all of your questions have been satisfactorily answered, you have done your due diligence and have spoken with existing franchisees, and you understand where your store will be located, it is time to sign on the dotted line. But before you do, make sure you avoid potential pitfalls. Franchisees often buy into a franchise without a full understanding of just what it takes to succeed in their chosen business. That is one of several common mistakes that are easily avoidable. The following are the mistakes you want to avoid when buying a franchise.
Not reading, understanding, or asking questions about the UFOC.
The Uniform Franchise Offering Circular is a big document, sometimes 75 pages long, but it is critical that you read and understand each item, 1 through 23. As you read the document, keep notes on those areas that are confusing. Don’t assume the franchisor is responsible for one thing or another; if it’s not spelled out in the UFOC, ask! List all of your concerns, and clarify which duties, obligations, and responsibilities belong to whom. Then, have your lawyer read the document and do the same thing. Finally, go over each issue, item by item, with the franchisor. Get everything that the franchisor promises and agrees to in writing and have it made part of the franchise agreement.
Not understanding or having an inaccurate understanding of the franchise agreement and other legal documents.
You and your attorney must carefully review the franchise agreement, lease and real estate agreements, and all other contracts. Any promises that the franchisor made earlier must be made part of your contract to be legally binding.
Not analyzing the market properly.
While the franchisor may help with site selection, it is nevertheless your responsibility to decide whether a particular location is promising. Is there sufficient traffic? What is the competition like? Are the competitors so strong that their market saturation may be hard for you to penetrate? You have to conduct sufficient research to make sure that there is a market for your service or product in your chosen location.
Not checking out failed franchises.
Locate some franchises that closed, were sold, or have changed ownership to company-owned, and find out the reasons for the change. Contact the original owners and get their stories. If there is a common theme, the underlying problem may be something you want to avoid.
Not contacting enough current franchisees.
The section of the UFOC on “Past, Current, and Future Franchisees” is a great starting point for locating franchisees to contact. It is very important to speak with them. Only they really know how the franchisor is to work with, how much money you can expect to make, what mistakes to avoid, and the like.
Other than the franchisees introduced to you by the franchisor, you should also survey other franchisees not listed in the disclosure document. Find out from them if the franchisor has a reputation for honesty and verify their experience with the accuracy of the UFOC.
Not meeting with the franchisor’s key management personnel at their headquarters and the representative assigned to your territory.
A sales representative can do such a good job that you may not bother meeting the other important personnel or traveling to the headquarters before signing the franchise agreement. Do not make this mistake. Meet everyone you can and ask all the questions you can. Verify the information provided by the sales representative. After the franchisor defines your territory, meet the field representative or district supervisor that will be working with you.
Not having enough working capital.
Money is the lifeblood of your business. Make sure you have enough capital to cover every cost associated with the business, including all preopening costs, your family budget, and operating capital for the business to make it through the break-even point.
W. Chris a young entrepreneur and businessman. Be a professional blogger since 2007 to share with her community and internet people for sure. 
