3 Key Franchise Mistakes to Avoid
Posted on: September 13, 2017 by RMS Hospitality Group
Aspiring entrepreneurs who want to own their own business often look to franchise ownership. As a franchise is essentially a branded successful business that needs individual leadership, it’s a great stepping stone to future endeavors. However, the blind spots and potential challenges are enough to deter any potential owner unless research and preparation is done prior to the franchise purchase. In addition to sharing this information with your clients, ensure they are adequately protected with the most comprehensive Franchise Select Insurance Program available.
Mistake #1: Buying into franchise for the freedom.
While your clients will own the franchise locations they purchase, they still have to take orders from someone else. After all, a franchise is a uniform brand that must be consistent among each store. The same uniform, attitude, and orders must be followed at each location.
Mistake #2: The illusion of security.
According to Forbes, the myth that franchises are less prone to failure than other small businesses is simply that. The reality is that they generally go out of business at the same rate. However, which franchise you choose can make a big difference.
“Some franchise chains have failure rates as high as 80% to 90%, while others have almost no failures. Don’t be seduced by vague statistics or common wisdom; do careful research on the specific franchise you are considering to determine how many franchise owners are still in business through the full terms of their franchise agreements,” says Sean Kelly, publisher of UnhappyFranchisee.com.
Mistake #3: Not hiring a lawyer.
Before making anything official and signing contracts, aspiring franchise owners should hire a seasoned lawyer to review the terms. If your clients are securing the next decade of their lives, they should consult with a professional to make sure everything is lawful and favorable prior to signing on the dotted lines.
About RMS Hospitality Group
At RMS Hospitality Group, we strive to protect each facet of franchises. For decades we have provided quality insurance solutions, business consulting, and aggressive claims management for businesses nationwide. As a testament to our experience, we were appointed in 1994 as one of the few “McDonald’s Approved Vendors” for franchises nationwide and became the largest broker in the system through the decade. We are also proud to announce that we are recognized as a Dennys Franchise Association Allied Partner. For more information about our comprehensive list of products, we invite you to contact us today at (516) 742-8585.