Now that it has been a few years since colleges first started offering certificate and degree programs in franchising, we are seeing more graduates forego the job market and pursue franchise ownership. If you are a recent graduate—or if you are preparing to graduate after the upcoming spring semester—and are thinking about buying a franchise, there are some facts you need to know that you most likely didn’t learn in school.
5 Important Facts About Buying a Franchise for Recent (or Rising) College Graduates
For example, here are some facts that all prospective franchisees—regardless of their age or business background—need to know:
1. Understanding the Franchise Model Puts You On the Right Path
When buying a franchise, a key first step is to ensure that you have a firm grasp of the franchise model. Too often, prospective franchisees move forward despite not having a clear understanding of what it means to be a franchisee. Since you’ve studied franchising in school, you are on the right path—now you need to expand on your academic knowledge through real-world experience.
2. There Are Some Things You Will Only Learn Through Experience
No matter how many classes you take, there are some things you will only learn through experience. It is important to treat buying your first franchise like a trial-and-error process. If you start down the path of buying a franchise and decide that you aren’t ready or discover an issue that makes moving forward unwise, you should use this experience to guide your subsequent efforts to pursue a different franchise opportunity.
3. Making An Informed Buying Decision Requires Business, Finance and Legal Insights
To make an informed buying decision, you will need to understand the franchise model, the specific franchise you are pursuing, the financial implications of moving forward and the legal risks involved. Even for experienced franchisees, this requires working with experienced professionals. As you move forward, you should work with an accountant or financial advisor as necessary, and you should consult with an attorney about a comprehensive franchise business review.
4. Failure Can Cost You Long After Your Franchise Terminates
As a franchisee, failure can have long-term consequences—even more so than failing as an independent business owner. If your franchisor terminates your franchise agreement for cause (i.e., non-payment of royalties), you could be on the hook for “lost future royalties” along with loan payments, lease payments and other continuing financial obligations.
5. You Can—and Should—Take Steps To Manage Your Risk During the Buying Process
While buying a franchise is inherently risky, there are steps you can—and should—take to manage your risk during the buying process. This involves working with experienced professionals as discussed above, conducting thorough due diligence, and taking the time necessary to make a fully-informed buying decision.
Contact Franchise Attorney Jeffrey M. Goldstein for More Information
If you are thinking about buying a franchise after college, we encourage you to contact us for more information. To schedule a call with attorney Jeffrey M. Goldstein, call 202-293-3947 or request a free initial consultation online today.