Whether you attend trade shows or do your research online, when considering franchise opportunities, you will come across plenty of people who say they want to help (or perhaps even guarantee that they can help) get your franchised business up and running. While some help is a good idea, and in certain respects will be absolutely essential, you also need to avoid falling for scams and giving money to people who lack the qualifications necessary to truly help you succeed in your new venture.
When it comes to seeking advice for your franchise investment, here is a brief overview of the options that are available. Note that these are not necessarily recommendations (each prospective franchisee’s needs are unique), but rather simply an overview of the types of franchise investment advisors that are out there:
Five Types of Franchise Investment Advisors
1. Franchise Lawyers
Franchise lawyers can advise you on the terms of a franchisor’s Franchise Disclosure Document (FDD) and help you understand and negotiate the terms of your franchise agreement. An experienced franchise lawyer will also have knowledge of competing franchise systems and be able to compare your chosen franchise against other opportunities.
2. Franchise Consultants
Franchise consultants (also known as “franchise advisors”) are individuals who claim to have expert knowledge of the franchise industry and the ability to help franchisees grow their businesses to profitability. While some franchise consultants come from deep franchising backgrounds, there are also consultants who have gotten into the business by taking classes – or even purchasing a franchise investment advisory franchise.
3. Financial Advisors
An experienced financial advisor will be able to help you make informed decisions about investing your life’s savings in a franchise opportunity. Have you saved enough? Do you have the reserves to weather a slow start? Will the income from your franchised business allow you to enjoy a comfortable retirement? These are the types of questions to ask your financial advisor.
4. Business Advisors
Like franchise consultants, business advisors (or “business coaches”) are somewhat of a mixed bag. There are experienced and proven advisors out there, but then there are those whose first business venture is advising other business owners. Before you hire a business advisor, do your research – you may be able to get free advice from organizations like Score.org.
5. Business Accountants
Finally, a business accountant will be able to help you complete your pro forma, evaluate your franchisor’s financial statements, and develop a business plan focused on achieving a sustainable cash flow. Look for a certified public accountant, and in particular one who has specific experience working with early-stage franchisees.
Factors to Consider When Seeking Advice for Your Franchise Opportunity
When choosing advisors for your franchise opportunity, here are four key considerations to keep in mind:
- Franchise Industry Experience – How long have they been in the franchise industry? How many prospective franchisees have they advised?
- Reputation – What is their reputation in the industry? Are they well known? Are they considered a thought leader amongst their peers?
- Past Clients’ Results – Have they actually helped their clients? What is their success rate in terms of helping clients achieve profitability?
- Client and Professional References – What do their clients say? Do they have professional references who can vouch for their experience and expertise?
- Represents Only Franchisees & Dealers – Do they have conflicts with regard to their regular representation of franchisors as well as franchisees? Do franchisors pay advisors for making franchise sales? Do franchise lawyers or their partners also represent franchisor interests in litigation?
Goldstein Law Firm | Franchise Attorney Serving New and Existing Franchisees Nationwide
Named 2016 Franchise Law Firm of the Year by Finance Monthly, the Goldstein Law Firm provides experienced legal representation to prospective franchisees nationwide. If you are considering a new franchise opportunity, call 202-293-3947 or contact us online to inquire about our flat-fee FDD and franchise agreement reviews today.