How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
When you are going to meet with your franchisor for your interview, it's almost like being a job seeker meeting a potential boss. You will be in control of your franchise location to some degree, but your franchisor still needs to approve you before you can join the system, and you still need to have your ducks in a row before you sit down.
Just as you wouldn't go to a job interview unprepared, you need to be ready for this franchisor interview if you're serious about taking the next step. Here's what you need to do before you go to your meeting.
Learn the industry challenges in detail
Your franchise investment should only be in an industry you've full researched. You need to know what the challenges are to brands and franchisees in this industry, and to the industry in general. It's very possible your franchisor will ask you about those obstacles and your ideas about them. Of course, no one will expect you to have all the answers, but just showing you are aware of the potential pitfalls demonstrates that you've done your due diligence.
Read the Franchise Disclosure Document (FDD)
You should not sign any documents or waive any rights until you've reviewed your franchisor's disclosure document in detail. If you are unclear on any part of it, speak to a franchise or legal professional for clarification.
Review your finances
Your franchise probably won't turn a profit overnight. In fact, it usually takes months to see a profit. Therefore, you need to know exactly what you are able to afford so you don't get in over your head and set yourself up to struggle. Ideally, you should have capital available to cover six months of expenses, whether it comes from your own savings and assets, financing or a mix of both.
Speak to current and former franchisees
Meet with current and former franchisees so you can get a better idea of the system, the franchisor and the overall experience. Bring a list of questions with you so you use your time wisely. Although what you want to ask will vary by system, you should definitely ask the franchisee what they liked best about it and what they wish they could change, as these answers can prove very insightful.
Being prepared before your franchise interview can help ensure you're a ready candidate and that you're not wasting your time. If you find you have some areas you want to discuss in detail with the franchisor, be sure to jot them down prior to the interview.
