Taking advantage of a franchise opportunity can be a huge commitment of both money and time. One of the problems that experts have noted when it comes to buying a franchise, whether it’s for boats or anything else, is that they jump into the situation without really seeing how far the fall could be. Often people find a business they like and buy it because it looks good to the consumer.
Instead of doing it this way, potential owners should do their due diligence and ask a series of questions before signing on the dotted line.
Here are 5 questions to ask before you sign on and be the proud owner of a boat franchise.
1. How well did the franchise do? One of the best ways to get this information is by asking other business owners. Listen to what they have to say. If dissatisfaction is what drove the landlord away, chances are it will drive you out, too. Be specific. Learn what the particular issues were and make a decision as to whether these are issues you can deal with. Also take a look at franchise associations and forums to see what owners are saying about the challenges of running the business.
2. How well do they all get along? Several franchisors describe their industry as a family. It is? Find out if there is more drama and conflict between the franchise owners than you want to take on. Make sure you agree with the support system that exists and, above all, if the values of the organization coincide with yours.
3. How much money can I earn? Prospective franchisees don’t usually bring this to the forefront early on, but it’s one that’s front and center regardless. You want to get an idea of the average initial investment, average unit sales, major expense categories, gross and net margins of the business, etc. Also, how long does it take for a new unit to break even and start to enter profit territory?
4. Would you buy a franchise again if you had the chance? This is a tricky question, but explore the answer no matter what it is. He wants to know what are the valid reasons for saying yes or no. While pride of ownership often makes a positive response more popular, ask enough questions to dig into the real reasons they might have left the business in the first place. It’s all a matter of reading between the lines.
5. Has there been a high turnover rate? Actually, this type of information is quite easy to find in a Franchise Disclosure Document (FDD). This document tells you how many times the business has changed hands and when. If there have been a large number of transitions, this could indicate a chronic problem.