1.  Chosing New Over Established Franchise:

A new franchise presents many risks.  For starters it is unproven, probably not well financed, and have not experience economic ups and downs, mistakes have not been uncovered and fixed.   There is no guarantee that the business will be around a year or two from now.  Stay away from new businesses that are trying to expand through franchising.

2.  Underestimating Cost:

There are many cost associated with a buying  and operating a franchise.  As a Franchisee you will have to share in the cost of fees for  marketing, legal, building, land, permits, licenses, Point of Sale System (POS), inventory, professional services, etc.  Don’t underestimate the cost.  Get a list all cost from the Franchisor.

3.  Confuse Freedom V. Independence:

Don’t buy a franchise if you’re seeking independence as an entrepreneur.  Remember, a franchise is an off-shoot of the larger organization and is bound by certain rules.  While you may have the leeway to do certain things you still have to follow the organization’s rules.  If it is independence you seek start your own business or buy an independent business.

5.  Not Doing Due Diligence:

If you don’t do your due diligence your franchise will fail.  Due diligence includes market research, talking to other franchise owner, visiting multiple stores, reviewing the reputation of the organization in social media, checking with the Better Business Bureau (BBB) to learn about complaints against the organization, assessing the location of stores to see if they’re so close to each other that they’re forced to compete for the same customers, etc.

6.  Not Seeking Legal Service:

A franchise agreement is a complicated legal document.  You need the service of an attorney to ensure that you’re signing a document that will not end up hurting you in the long run.  Use franchise attorneys who have experience in providing legal service to the franchise industry.

7.  Not Prepared To Do the Time: 

Even though you’re walking into an established business as the Franchisee you will still have put in the time to make the business a success.  You to get the business up and running, that means you have to oversee the setup, hiring and training of personnel, manage the ordering and delivery of supplies, ensure that the business is open and closed at the designated time, payroll management, provide financial reports to the Franchisor, etc.

8.  Not Ready to Market:

Franchisees tend to forget that even though the Franchisor have the bulk of the marketing responsibility they too have to do some marketing.  Franchisees have a responsibility to do local marketing and promotions.  You have to be prepared for this task financially and mentally. 

9.  No Franchisor Financing: 

Seeking financing from the Franchisor is much preferrable than getting it from a bank.  The Franchisor will have a vested interest in seeing you succeed.