Five Due Diligence Tips for Massage Business Owners
Let's consider these due diligence tips
Massage Business Owner Sends Warning: "
When investigating a franchise business opportunity, Stabile also offers these key points to consider:1. Cost: What is the total investment? Several different types of costs are involved, including the initial franchise fee paid in return for using the franchisor's business concept/system and name for a limited time, ongoing royalty payments for the services and support provided by the franchisor, space rental and leasehold improvements, equipment purchases, working capital required to operate, advertising fees, etc.
2. Training & Support: What is included in the training program offered by the franchisor and will it prepare you to run all aspects of your business efficiently and successfully? Do they offer an opportunity to meet other franchise owners? Also, what kind of field assistance, ongoing support, and marketing support can you expect from the franchisor?
3. Market Buzz: Are you familiar with the market you are entering? Consider what kind of need there is for your particular brand of services, and if it is growing or diminishing.
4. Location: Site-selection is critical. Does the franchisor offer population based exclusive territories? Does the franchisor help you decide on the location, and assist you in negotiating a favorable lease? Also, know the demographic of the market area in order to familiarize yourself with client potential.
5. Financing: Does the franchisor assist with financing? If not, you'll need to determine your credit rating, and possibly correct any erroneous information before you try to borrow.
These are some of the topics discussed in detail when working with any legitimate franchise business model. "elements therapeutic massage has a multiple interview process to ensure to the potential franchisee that he or she is making the right decision before a financial commitment is entered into," Stabile reported.
These are interesting questions, but where would you look to obtain information or answers to these questions?
Well fortunately, if you are buying a franchise, then you are entitled to a disclosure document in most jurisdictions.
The answer to 1 is found in item 8 of the UFOC, but beware that only 3 months of operating costs are typically provided for by the franchisor. You need to contact the all the other franchises, listed in item 20, to confirm the average length of the burn -the time it took to make enough money to cover expenses.
Training and support is harder to gauge. You can review the table of contents of the franchisor's training manual to get a sense of what they are going to give you for your franchise fee. Again this is provided in the UFOC or disclosure document.
Question 4 is critical, but most franchise contracts will put the entire legal responsibility for site selection on the franchisee, while at the same time the franchisor will purport to "get you the best deal because of their negotiating skill". This is a big trap - either the franchise agreement commits the franchisor to exercising reasonable skill in picking a franchise location or it doesn't. Don't be bluffed into accepting franchisor who picks your location, but disclaims all legal responsibility for the choice.
Question 3 cannot be answered by reference to the UFOC, but question 5 is answered in item 10 of the UFOC. UFOCs are online at Caleasi, or can be bought for $200.
