While the ultimate franchise decision is yours alone, it’s important to enlist the help of franchise professionals throughout the purchase process, as they can provide you with the information and context you need to make the right decisions. As Gary Prenevost, President of FranNet, Southern Ontario, says, when you make other major purchases, you trust the experience and input of those who have relevant experience in the field, and a franchise investment should be no exception.
“There is so much to learn about what it takes to become successful through franchise ownership; each franchise concept has different paths to success. Most people have never bought a business before, and thus ‘don’t know what they don’t know’ about how to make sure the business is right for them – this is where franchise professionals come in,” says Prenevost. “Think about it this way: if you are a first-time homebuyer, would you go to a real estate agent who specializes in working with first-time homebuyers, or would you try to do it on your own?”
Here’s a list of franchise professionals you should consult before making any final decisions about your franchise purchase, and whom you can continue to work with as you get your location up and running.
Franchise consultants can help you in identifying your unique mix of skills, talents, and experience, and can help you figure out how to channel these assets into the right franchise opportunity. They may also be able to provide insight into the perceived strength of the brand, and help you determine what information to look out for when speaking with the franchisor and current franchisees.
Prenevost notes that a franchise consultant can also play a very important role in ensuring that a prospective franchisee proceeds through the due diligence process at the right pace, with the right information at hand. “A good franchise consultant will help prospective franchise buyers at every step of the way, making sure that they don’t ‘jump steps’ and rush into things prematurely.”
“It is important for a prospective franchisee to work with a franchise accountant, as a franchise accountant has the knowledge and expertise in the industry to help identify potential concerns in a franchisor or potential franchise target before the purchase takes place, through review of KPIs [key performance indicators], disclosure documents, and other measures,” explains Lyn Little, Senior Manager, Assurance and Accounting with BDO. “Additionally, a franchise accountant can identify ways to structure a deal to minimize the tax impact on the purchase of a franchise.”
An accountant who is well-versed in franchising can also help you determine your net worth, assets, and obligations, and can provide advice and guidance when it comes to creating a business plan, which summarizes your current and projected finances for this investment, along with how you plan to set up and operate your business.
Little says a franchise accountant can also remain an asset once your franchise is up and running. “Once the franchisee starts operations, a franchise accountant could provide financial services that are outside of the knowledge base of the potential franchisee, such as bookkeeping, tax compliance, and payroll processing, along with financial statement preparation and reporting.”
A franchise lawyer will ensure all legally required information has been disclosed to you by the franchisor, and will assist you in fully understanding all of the documentation involved in the franchise investment process, including the disclosure document and franchise agreement.
For example, a franchise lawyer will play a critical role in helping you decipher the disclosure document that you receive from the franchisor during the due diligence process. This disclosure document contains a summary of information about the franchise system and its officers, and outlines the rights, responsibilities, and obligations of the franchisor and franchisee. An experienced franchise lawyer will be able to guide you through the document, helping you to understand the material it contains. They will also be able to advise as to any franchise-specific legislation that exists in the province in which you’ll be operating.
In addition to the disclosure documents and franchise agreement, your franchise lawyer should review all contracts or other agreements, like a real estate lease, before you sign. He or she will look out for any irregularities within the paperwork, along with any areas in which there is room for negotiation. Your lawyer will be able to lead this negotiation process, if necessary.
Once you know your net worth and have calculated how much money you have available to invest in your franchise, you may need additional funds to finance your new business. Many franchisees require financing from a business lender on top of the personal funds they will be investing in the venture. A banker with a background in franchise financing can help you determine the best banking products and services to support your business as it’s launched and continues to grow, including business loans, lines of credit, and business accounts. He or she will review your business plan, finances, and assets before making any recommendations.
As a franchisee, you need to be prepared for the worst, with a plan in place to help protect you from unexpected events or situations that could damage your business. You can help mitigate the risks of business ownership by having a risk management plan in place, which will include a business insurance package. With so many policies available to business owners, from general policies adopted by most businesses to more specific policies catering to particular regions or industries, it’s always a good idea to work with an insurance broker with franchise experience. This broker can help you put together the best, most comprehensive package to meet the needs of your unique business.
With the help of the right franchise experts, you should be well on your way to opening your new franchise business. Turn to page XX to find the top tips you should keep in mind as you launch and grow your franchise venture!
How Do I Find the Right Franchise Professionals?
When you’re looking to solicit the input and experience of a consulting, accounting, banking, legal, and/or insurance expert to help you make an informed decision and establish your franchise location, it’s important to enlist the help of a professional who’s fully versed in Canadian franchising.
CFA’s online Member Directory features support services and suppliers in 18 business sectors and disciplines. As CFA members, these professionals and organizations have expertise in franchising, providing their services specifically to franchisees and franchisors.
To access the full list of CFA support services and suppliers, visit www.cfa.ca/support-services