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Looking to Buy A Franchise? – A Step-By-Step Guide

Once you have completed your research and determined which restaurant franchise you would like to own, it is time to apply. In certain cases you may have inadvertently already started the application process, when acquiring information during your research phase. If you have already started talking to someone within the company, chances are the application process has been started. Most restaurant franchises have a section on their site, which invite you to apply to become a franchisee. Regardless of how the process is started, a typical application process is included below.

Buying A Franchise – The Application Process

Buying a Franchise: Franchise application process

The purpose of the application process is to assist the franchisee and the franchisor in making a fully informed business decision. Much like you want to ensure that the restaurant franchise is right for you, the franchisor wants to ensure that you are right for them. Apart from financial capability, franchisors look for specific characteristics that fit their profile of a successful franchisee. It is a mutual evaluation process that both sides need to take seriously if the business relationship is to be a successful one.

1. The Initial Contact

The initial phone conversation is for both parties to get a general feel for one another. The franchisor will determine your level of interest and provide you with general introduction to the franchise opportunity. The call is to be kept relatively short as it is only an introduction, things will get more in-depth during the First Interview.

2. The First Interview – Getting to Know the Franchisor

The First Interview is similar to the initial call, just much more in-depth. It is designed for the franchisor to get to know you as best they can, while at the same time, providing you with some general information about the franchise opportunity. Ideally both parties will have a chance to ask and receive answers to all their questions. The intent is for both parties to determine if this is a business opportunity that will fit everyone’s needs. Ultimately it’s about trying to identify if you would be successful in this business.

3. Getting Your Finances Together

Following the interview the franchisor would then have you fill out a Qualification Form. This may seem intimidating or intrusive at first glance but it is a necessary step. The franchisor needs to review your details and financial capability in order to qualify you as a prospective franchisee. There is no need to worry as your information will be held in the strictest of confidence. Also, in no way are you committing to the franchise by filling out the qualification form. It is used for the sole purpose of evaluating your current financial situation and provide you direction on how to best fund your new business venture.

4. Understanding the Disclosure Document

Franchisors are required to provide a Disclosure Document in certain provinces. This extensive document is essential for you to review in order to make a fully informed decision. Just as the franchisor determined your financial capability, the disclosure document is what will help you qualify the franchisor’s capability. Within it you will find details regarding: the background of organization, legal information, all relevant fees, the financial statements and much more.  Read it carefully for a greater understanding of what the mutual relationship will be and take it to your advisors. After you have had the chance to review it, you will then be ready for the next step in the process.

5. Contacting Current Franchise Owners

As previously mentioned, it is important that you do your due diligence and speak with existing franchisees. Contacting them and asking questions will assist you in understanding the opportunity. Strong franchisors will provide you with a list of the current franchisees and their contact information. Aim to contact at least 3 or 4 of the individuals from the provided list, either by phone or e-mail. Feel free to ask them any and all questions you need in order to feel comfortable with your assessment of the restaurant franchise. That being said, it is also important that you respect each of these individuals’ time and coordinate to talk when it fits within their busy schedules.

6. Discovery Day

Discovery Day is the next important step in the mutual evaluation process before the final decision is made to award you a franchise. This is your opportunity to meet some of the people who will support you as a franchisee. Many franchisors will not only show you the restaurant facilities but actively engage you as well. Seeing how you interact with staff and customers will give them insight into what they can expect from you as a franchisee. It also gives you some first-hand experience of what to expect, thereby contributing to the decision making process for both parties.

7. Signing The Franchise Agreement

The final step is the signing of the Franchise Agreement. Should both sides determine there is a mutual fit the franchisor will send you the Franchise Agreement that you may sign and return together with the other required documentation and the initial franchise fee. Before signing, be sure to bring the Franchise Agreement to a franchise lawyer for their review. They will be able to flag any irregularities and provide you with the best advice. Once the agreement is signed, training will be scheduled and the initiation process can begin.

 

Wayne Maillet Restaurant Franchise Opportunity SpecialistWritten by Wayne Maillet, president of Franchise Specialists. Wayne is a leading Canadian franchise management consultant and published author of the book Franchising Demystified. You can order the book at http://www.franchisingdemystified.com/   Wayne Maillet can be reached at 604-941-4361