The Top 5 Tips for Buying Your First Franchise
Stepping into franchise ownership for the first time can be a daunting but exciting process. Whether you’re eyeing a popular brand or looking for something niche, knowing how to navigate the franchise buying journey is crucial for long-term success. In a recent discussion, franchise experts Ryan and Tyler break down the top five tips every prospective franchisee should focus on before diving into their first business venture. Let’s dive in!
1. Know Your "Why"
Before buying your first franchise, ask yourself one essential question: Why are you doing this? According to Ryan and Tyler, having a clear "why" is the foundation for your decision. Are you running away from something, like a job you dislike? Or are you running toward something, like more time with your family or financial freedom?
Your "why" will help guide your decisions, keep you focused, and push you through the inevitable moments of fear and doubt. "Fear can be crippling during this process," Ryan explains. "But if you know your why, it should be more powerful than any fear that pops up."
Whether you're looking to escape a bad work situation or pursue a dream of business ownership, being crystal clear on your motivations will help you navigate challenges and make smarter decisions.
2. Have a Solid Management Plan
Ryan and Tyler emphasize that one of the most overlooked but critical components of franchise success is knowing who will manage your business. People often focus on the product or concept, but the real key is the person behind the scenes running the day-to-day operations.
"If you're not going to be the one running the business every day, then you need to find someone who will," Tyler says. "You need someone who complements your skills—if you're good at marketing, find someone strong in operations, and vice versa."
Many successful franchisees, like Ryan, have operating partners who run the business on their behalf. This model can work incredibly well, but it’s crucial to select the right partner—someone you trust and who brings the right skills to the table.
3. Maintain Momentum in the Process
Buying a franchise isn’t a decision you can make overnight, but it’s important to maintain momentum once you start the process. When you slow down or let distractions take over, it becomes easier to lose focus and let doubts creep in.
"Momentum doesn’t mean rushing into a decision," Ryan clarifies. "It means creating capacity in your life to stay engaged with the process."
The franchise discovery phase is all about learning. You’ll need to review multiple brands, go through franchise disclosure documents (FDDs), talk to franchisees, and more. Keeping up with the process ensures you make a well-informed decision, and it shows franchisors that you’re serious. Many successful brands evaluate candidates based on their level of engagement.
4. Work with an Expert Franchise Advisor
Just as you wouldn’t buy a house without a real estate agent, you shouldn’t buy a franchise without a franchise advisor. Advisors provide valuable guidance and insight, helping you navigate the complexities of the franchise buying process.
"Franchise advisors don’t cost you anything—they’re paid by the franchisor—so why wouldn’t you leverage their expertise?" Tyler says. A good advisor will guide you through the evaluation process, make sure you're asking the right questions, and help you avoid costly mistakes.
Moreover, experienced advisors know the ins and outs of the industry, from funding options to the fine print in FDDs. They can provide inside information on brands that might not be immediately obvious, ensuring you make a decision that aligns with your financial and lifestyle goals.
5. Validate, Validate, Validate
According to Ryan and Tyler, validation is the most critical step in the entire franchise buying process. Validation involves speaking directly with current and former franchisees to get their honest opinions about the franchise you’re considering.
"Validation is about hearing from the people who are already in the trenches," Ryan explains. "You need to know their experiences—the good and the bad—so you can make a well-rounded decision."
It’s not just about talking to successful franchisees. Make sure you speak to those who may have struggled or faced challenges so you get a complete picture of what ownership might be like. The goal is to ask all the tough questions and get the answers you need before signing any agreements.
Bonus Tip: Ensure You Have Enough Financial Resources
One final, but crucial, tip for buying your first franchise: make sure you have enough money. Knowing your budget, expenses, and financial capacity is essential before diving into franchise ownership.
Ryan and Tyler emphasize the importance of building a detailed pro forma—a financial projection for your business—and running it by an accountant or financial advisor. You need to understand both the best-case and worst-case scenarios and ensure you have enough capital to cover your investment, including any multi-unit deals you might consider.
"Nothing is worse than running out of money halfway through building your business," Tyler warns. Whether you're funding through personal savings, loans, or partnerships, having a clear financial plan is essential to set yourself up for long-term success.
Final Thoughts
The decision to buy your first franchise is a big one, but with the right preparation, it can be one of the most rewarding moves you make. From knowing your "why" and developing a strong management plan to validating the franchise and working with an expert advisor, these five tips will help guide you through the process and set you up for success.
If you're ready to explore franchise opportunities or want to learn more, don’t hesitate to reach out to a Franchise Sidekick advisor. A simple 10-minute call could be the start of your journey toward financial independence and business ownership.
