If you’re thinking of buying franchise, be aware you’re purchasing a business not a job. The franchise may cost anything from tens to hundreds of thousands, so check that your legal and financial advisers are up to the job.

Here are the three Golden Rules for new franchisees :

1. With many franchise contracts weighing in at up to 50 pages in length, you’ll need to take advice. Dan Archer of the British Franchise Association (BFA) says, “With a document as comprehensive as this, it’s vital to know what you’re committing to. Franchise lawyers typically charge a fixed fee of £350-£750 for assessing and explaining the franchise agreement.”

It is a wise precaution to bypass your family solicitor and choose one affiliated with the BFA. There’s a list at www.thebfa.org.

2. Check your own financial position with a specialist accountant before making a move. Rob Mott from estate agency franchise Enfields says, “Ensure you have enough money to buy the franchise and also to maintain your lifestyle through the first year. When you’re running a new business, you don’t want pressure on your home finances. Once you have potential performance figures for your franchise from us and worked out your business plan, take it on to an accountant to challenge them and give the whole plan a ‘sanity check’.”

3. As well as getting advice from professionals, talk to existing franchisees who know the business from the sharp end.

If you follow these three golden rules, you should at least have a good chance of surviving, even if it’s you first venture into your own business.

When signing up to a franchise deal, there are a few details you should get clear first:

1. Make sure your contract mentions the period of the agreement. This is often five years, but it can vary. It should also specify a renewal option. Check any small print in the renewal terms in case they involve much greater expense or other prohibitions.

2. Nail down the exact location you’re getting and your rights to exclusivity within it.

3. All fees and costs, plus calculation formulas, should be presented to you. You also need to know if you can sell the business on for a profit.

4. A clause specifying that you can leave the business to next of kin in the event of your decease is also important, if a little gruesome to the squeamish.

5. Costs of training of you and your staff should be met from the fees you pay to the franchisor. Hidden costs for training can be large and sometimes disabling.

6. If you think you know enough to set up on your own after a few years, talk to the franchisor. Enlightened businesses will provide opportunities for you to expand with greater input to the business as a whole.

Above all, make sure you are aware of all the subtleties of the business before signing away your cash.

One of the simplest ways of starting a business is to buy a franchise. These are usually sold by suppliers of well-known products or services in order to expand their user base without investing in more staff, bricks and mortar etc. It’s also a good way of increasing cash flow.

Franchises can represent a good deal for a startup business. Typically, the franchising business will provide product, literature, national advertising, links to potential customers, and much else. All for a price, of course.

What to look out for when buying a franchise

1. Make sure you have a solid business plan in which you have budgeted for your living expenses and management fees.

2. You may have to borrow from a bank, but expect to commit about one-third of the total cost yourself.

3. The franchisor should know the business and its prospects better than you, so take their projections seriously.

4. See if you are eligible to secure any loan through the UK Government’s Small Firms Loan Guarantee Scheme, if you are in the UK. Other countries may have similar schemes.

5. If you are not satisfied with the information you are given by the seller, walk on by.

Tomorrow we’ll look at what you need to do before you sign on the dotted line.