The 10 Most Common Mistakes when Obtaining a Franchise in the Philippines
Posted on November 24th, 2008
1. Not able to read and understand and asks questions about the disclosure document. These documents are usually long but it is very important to read and understand it. Keep notes to those areas that are unclear and ask question if necessary.
2. Misunderstanding and misinterpretation of the franchise agreement and other legal documents to be signed. You and your attorney should review the agreements and contracts. Make a list of questions then present this concerns to the franchisor and get the clarifications in writing. There’s no reason why the franchisor can’t give you an additional documentation to clarity something.
3. Not looking for a sound legal advice. Look for an attorney that is experienced in franchising.
4. Not able to verify oral representations of the franchisor. Conduct proper precautions. As much as possible, review and summarize the details of your agreements and do not leave anything unresolved. Get everything that is orally promised in writing if it differs from other literature and the disclosure document.
5. Not communicating to the other franchisees. This is a valuable starting point for locating franchisees. Discuss any concerns with them and you may get tips from them. And if you get their opinions, you now have a clue of what are you going to do with your soon-to-be business.
6. Not able to confirm the reasons for failed business. As much as possible, locate franchise outlets that are closed, sold, or have changed ownership to company-owned, and find out the reasons for their change of status.
7. Not having sufficient working funds. Make sure you have enough funds to cover every costs associated with the business. And make sure you set aside your money for your family budget and have enough cash for your business.
8. Not able to recognize the need for financing, don’t know how to make proper loan request and not developing an accurate and genuine financial statement. If accounting is not you forte, find a good accountant that can help you with your business.
9. Not meeting the franchisor’s field representative and his management personnel. Do not make this mistake, meet the franchisor personnel and verify the information provided by the sales representative. And if you foresee some problems, it is much better to address them and try to work them out before you sign the agreement.
10. Not analyzing your target market in advance. It is your responsibility to decide whether a particular location is desirable and promising and it is also important to confirm your market first for your product or service in this area.
