8 Things You Should Know Before Buying A Plumbing Franchise
Thinking to buy a plumbing franchise? That’s great! Here, at Commusoft, we talk a lot about how to start and grow your business, how to take it to the next level by using the right tools and hiring the best people. However, if you’re the kind of entrepreneur that doesn’t want to start from the bottom and has access to capital, buying an existing franchise can be the best solution for you.
Before investing in a franchise, there are a few things you should know. And since we believe in providing you with the best information, we’ve contacted Mikayla St. Claira, Franchise Direct‘s Public Relations Specialist, to tell us more about what goes into trying to buy a plumbing franchise. We’ll let here take it from here!
Skip to what matters most to you:
- Conduct an in-depth research.
- Gauge your strength and work style.
- Research the fees.
- Plan your finances properly.
- Read carefully through the franchise disclosure document.
- Look for a franchise attorney.
- Hire professionals.
- Inquire more from other franchisees.
Regardless of the pitfalls and the high upfront costs, buying a plumbing franchise can be the best way to become the business’s sole owner. Thus, you can enjoy all of the benefits it comes with provided you do it in a smart and well-planned way.
If you are thinking of getting into a franchise without getting out of the business too soon, we have curated a list of 8 things you should think about before you open your plumbing franchise doors.
The first thing you ought to do before buying your plumbing franchise business is to educate yourself. By this, we mean that you should be very familiar with the plumbing industry and, at large, the business you intend to buy. Do as much research as possible until you have a good understanding of what you’re getting into. It is crucial to interview the prospective franchisor extensively.
Typically, they tend to introduce you to their brokers, who help them sell the plumbing business license to you. So, be ready to handle them head-on to end up on the winning side. You can ask them questions concerning their pre-opening support, design, site choice, construction, and financing.
In addition, let them clarify the plumbing franchise license boundaries, training, and grand-launching program. Once you have all of the answers you need, you can continue with the next step.
How do you organize and create business strategies? Do you like interacting with people? And how about inter-business sales? If you do not enjoy business-to-business sales, you will find it quite tricky to run your plumbing franchise. You might find you need a partner or a Sales Manager from the get go to help you out, as being a great salesman is an essential part of growing your plumbing franchise business.
As an aspiring franchisee, it’s good to be candid with yourself on your strengths and weaknesses. It’s important to choose at least three of your most trusted people and let them tell you what your strengths and weaknesses are, without fear of listening to what they have to say. We’re often tempted to think of ourselves in extremes: either very optimistic (I’m the best there ever was!) or very pessimistic (I’m the absolute worst!), but the truth is always somewhere in the middle.
Understanding our strengths and weaknesses ensures we make the most of the former and mitigate as much as we can of the latter. This can spell out the success or failure of your plan to buy a plumbing franchise.
One thing many prospective franchisees forget is that besides the upfront franchise costs, it’s necessary to make payments for the continuing advertising and royalties fees. The headquarters may also require you to do special promotions and give away some free stuff during open days. So, your options are either to be very careful and have restrictions on their ability to operate and control a business, or plan ahead for these costs.
In the event of a system-wide scandal, your franchise may end up performing poorly. This is to say, if the franchisor faces a problem, your plumbing franchise can easily be affected too. It’s the trade-of you have to account for when reaping the benefits of having an existing brand that customers are already familiar with.
Generally, starting a plumbing franchise may be costly. This includes the buy-in fees and the location costs, fit-up construction for the shop-front, equipment, and initial marketing fees. Like any other business, the franchisee requires at least the first year of operation on capital before the business starts prospering. Additionally, you will need funds to survive while still developing the business.
This being said, most businesses take a few years before breaking even, but with a franchise and an existing brand that people are familiar with, it’s much likelier to recoup your investment and make bigger profits sooner. It’s all about weighing up your pros and cons.
The FDD, or the Franchise Disclosure Document, serves to provide adequate information about the franchisor, franchise unit, and the franchisee requirements. It means that the franchisee is never completely independent. As a franchisee, it is a requirement for you to run your plumbing business as per the procedures and restrictions put forward in the franchise covenant.
Usually, these kinds of restrictions may include pricing policies, geographic boundaries, and what products or services are to be sold. The agreement also provides requirements on the amount of working capital you need on standby.
Negotiating for a franchise agreement is never an easy job, and not all business lawyers can manage. Therefore, finding yourself a specialist in these matters is pretty essential. The franchise license agreement comes with a contract that defines the relationship between the franchisee and franchisor.
Additionally, it describes the use of trademarks, control, support, and various fees. In simple terms, it is a legal and written contract between the franchisee and franchisor that outlines what each party can do. In case of rivalry between these two parties, a franchise attorney is a must-have for defending your business in the court of law. A lawyer can help make sure that you’re not drawing the short end of the deal when trying to buy a plumbing franchise by arguing for better terms in your favor.
Apart from having a franchise attorney, you can also use a professional helper to smoothen the plumbing business’s operation. For instance, you will need an accountant to help keep books of account for the business. Plus, you will require a breakeven analysis to enable you to understand your monthly cash outlay.
What’s more, an experienced insurance agent can also be beneficial for protecting your business. The entire team of professionals must review the franchise contract before signing it.
Finally, it is vital to reach out to other individuals owning franchise businesses similar to the one you’re planning to buy and to get their real story. By doing so, you will be able to evaluate the benefits and limitations of buying and running a plumbing franchise. Don’t be afraid to ask questions. One of the most important ones to ask is how much help they receive from headquarters.
It may be useful to come up with a list of questions before meeting with other franchisees. Strive to speak to at least 4-5 franchisees since everyone’s story will be a little different. Additionally, they might want to paint a rosier picture so listening to multiple accounts will help you draw your own conclusions.
The takeaway on trying to buy a plumbing franchise
Buying and controlling a plumbing franchise can seem pretty straightforward but only if you understand all the basics before commencing. The above is a list of few things a dedicated franchisee like you should keep in mind before buying your plumbing business. If you want to get a head start on making it a successful venture, download the infographic below to discover the software features you never even knew you needed!