For an investor, buying a franchise requires as much planning as starting your own business. Before you proceed, a number of checks must be made with an expert to avoid errors that could cost you dearly.
Let's have a look at the 5 questions to ask your accountant before buying a franchise.
1 — What type of franchise should I consider buying?
First, you should consider what type of franchise you want to acquire. There are many opportunities in business and that's why it is important to evaluate the potential companies that could interest you. Once you have made your choice, your accountant can work with you to assess the demand, potential competitors and the current market in the sector you have targeted.
2 — Do I have enough capital to buy a franchise?
If you want to buy a franchise, you may need to save for a down payment. However, you also need enough capital to pay your bills and business taxes, especially if sales are not as good as expected in the first few months of operation.
You can consult your accountant about the funds you should set aside to protect yourself from the unexpected. This is more prudent than relying solely on financing. Before starting a business, check if your financial situation allows you to make the purchase and if you really have the financial strength to invest such a sum.
3 — What is the franchisor's financial situation?
You also have the right to review the franchisor's latest financial statements with your accountant. This will give you a better idea of the company's viability, including where its profits come from and the nature of its assets and liabilities. You can also check whether the data provided is comprehensive and accurately reflects reality. Ensuring that your franchisor is financially sound and reliable will help you avoid unpleasant surprises.
4 — Are there any additional fees and taxes to consider?
Buying a franchise can involve a number of additional fees and taxes that you may not have considered. You should therefore check with your accountant to see if you will have to incur such additional expenses. Success in the business world depends on knowing all the financial obligations you have to the tax authorities and your franchisor.
5 — Is it easy to get financing?
Unless you have the funds to start your franchise in advance, you will probably need to apply for a bank loan. However, how easy is it to get financing? When you meet with your accountant, you can evaluate different financing options.
Unlike starting a new company, obtaining financing is often easier when it comes to buying a franchise. Banks are more likely to finance a franchisee, since the company's foundations are already well established. However, you will still need to agree to certain guarantees and have a good credit history.
Before purchasing a franchise, ask the T2inc team for advice
As you can see from this article, buying a franchise requires a high level of planning. However, even with a great deal of will and motivation, you will still have to rely on the advice of a tax accountant who fully understands all the nuances of the transaction.
If you would like to benefit from qualified expertise in franchise buying, contact the T2inc team. Our team of experienced accountants and tax specialists will contribute to the success of your new business.