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Red Flags to Watch out for When Finding a Franchise for Sale

Posted on Apr 13th 2022


Red Flags to Watch out for When Finding a Franchise for Sale

With so many franchise options to pick from, it can be tough to determine which ones are low risk and have the best chance of success. Because investing in a franchise opportunity necessitates a thorough due diligence process, potential investors and future Franchise Owners must be prepared to know where to look and what rocks to look under. This procedure entails assessing how the franchisor manages the franchise program and determining if they deliver on their promises. Finding out where a franchise delivers and succeeds is a good place to start. However, potential red flags should also be kept in mind.

In this guide, we’ll break down a few common red flags one will find not only in the pet franchise world but in the franchising world as a whole.

7 Red Flags to Look Out For When Searching for Your Dream Franchise

They Offer Discounts and “Sales” for their Franchising Fees

We do not recommend becoming acquainted with franchisors who offer reductions or “sales” for their franchise fees. Everyone enjoys a good deal, but providing discounts or promotions on franchise costs is a warning signal. It can't only be about saving $3,000 when buying a franchise. It has to be a matter of fit. Can you see yourself as a successful Franchise Owner of the business model being offered for sale? Consider purchasing it if this is the case. Don't do it if you don't align with the business model. It’s as simple as that.

Avoid franchises that offer discounts for signing up for a franchise.

You’ve Heard Some Negative Things About the Franchise

Before starting a franchise, it's crucial to complete your homework. Talking to other Franchise Owners and reading online reviews can also provide you with information that the firm won't provide you. Most Franchise Owners are eager to share their stories, and they'll tell you about the support system, how transparent and communicative the franchise is with Franchise Owners, whether customers are loyal to the brand, and so on. You can also look at Facebook, Yelp, and other social media sites to determine if most of the reviews are positive or bad. While a few unsatisfied consumers will always leave negative reviews, it's not a good indicator if the bulk of them are unhappy with the brand.

Franchises with Very Similar Concepts Have Failed

A certain sort of business may struggle to succeed in a certain market. This can happen due to poor management, but if you notice a swarm of failed enterprises that are identical to the one you're going to establish, consider it a warning sign. Success, on the other hand, can be risky. If you live in an area where formidable competition is prospering, try not to open up shop too close to them. Keeping your adversaries close isn't always a smart idea. Starting a franchise, like any other business venture, might be dangerous. So, it's understandable if you're concerned about making the proper option. While it's impossible to predict a company's future, doing your homework and understanding what you're getting into will help your dream franchise outperform the competition.

Avoid franchises that offer similiar plans that have failed.

They Offer Something That is Too Good to Be True

If something appears to be too good to be true, it most likely is. When you speak with a franchisor and they refuse or are unable to see the shortcomings in their business, consider it a red flag. Every company has weaknesses. Transparency is essential for franchise success, which involves sharing both the good and the bad. Don’t trust franchisors who can’t seem to come up with a single flaw that they are working on.

They are Really Pressuring You to Close on the Deal

Franchises that press their franchisees to close deals as soon as possible are usually primarily interested in making rapid money from franchise fees. They aren't thinking about the franchisee's best interests. They're not interested in long-term growth with you, and they usually don't thoroughly vet their franchisees. This is a formula for disaster, so trust your instincts if something doesn't feel right. You should absolutely never close on a deal unless you are 100% committed to the business.

Avoid franchises that are really pressuring you to sign with them.

They are Putting off the Paperwork or Stalling

You can find yourself in a position where the franchise representative waits until the very last minute to send out the Franchise Disclosure Document (FDD). Examining the FDD is an important element of the franchise research process. This lengthy document contains vital information about the franchisor, such as background information on the management team, contact information for current and previous franchisees, financial data, and more. Litigation is included in the "extra." A significant number of lawsuits, usually of the franchisee-versus-franchisor sort, is a common reason for delaying the FDD. If a franchisor refuses to give you a copy of the FDD until you meet with them in person, walk on.

They do not Provide Any Support

One of the most appealing aspects of starting a franchise is that you'll have access to a team of professionals that have done it before and are prepared to assist you. Your franchise should provide some type of support to help you learn and expand, from finance to finding a location to marketing and hiring. After all, it's only when you succeed that the franchise succeeds.

It's a terrible sign if your franchise abandons you and expects you to sort things out on your own. If the franchise's team members are unwilling to assist you, it indicates either inexperience or a lack of concern for its Franchise Owners.

Avoid franchises that offer no support during your start up.

How was our guide to avoiding red flags when searching for a franchise? Tell us your thoughts in the comments below. Don’t forget to get in touch with the team at Dog Training Elite today to learn more about dog franchise opportunities!

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