One of the most important decisions you can make when taking the plunge into new ownership is whether to invest your money into (or buy out) a franchise. You’ll need to carefully weigh out things like franchise liability protect you as a franchisee and the advantages of a particular franchise versus similar franchises already not under contract to the franchisor or which is your own business with all the advantages and disadvantages you can recognize.
Ask yourself these questions:
Do I have the upfront capital necessary to purchase the franchise?As an investor or a business buyer you must be prepared to make a strong investment. A good franchisor will be certain you have a store front with a recognizable brand. They should have a proven business model and receive consistent business throughout the country. Do you have a great amount of cash to invest into a new business or franchise. You may be able to purchase a franchise opportunity for under $20K and successfully operate on your own due to the fact that you do not have to pay in excess of $100K to sustain the brand and system.
Is this a financially sound decision?Thoroughly examine your financial situation. Because costs to start a franchise may be high, it is a good idea to confirm at the start of the relationship when you can expect to be able to recoup the money you have spent on franchise fees, royalties, supplies, insurance, rent, and any other monthly expenses. Is this really what I want to do. Can I see that expending all my cash, and then coming up short is a realistic possibility?
Can I expand the business once the initial lease has been fulfilled and the initial business has created profit?
Do I have the time to follow a rigid, proven system?It will be the detail you pay attention to and will make the startup an easy choice. Know what you will do, and work smart. Do not jump in to one thing that you fear; a multitude of responsibilities will set you back. The worst mistake you can make is voluntarily demonstrating a lack of knowledge just before you rent the franchisor’s work.
Do I want the responsibility of management and day-to-day concerns? franchises provide an experienced brand and demand that provide self-sustaining operations and great leadership. This means that the business owner will be expected to provide all daily, on-going business assistance. The franchisor needs to be sure that a business is running smoothly. Will you be able to handle all of this with expertise, excellent customer service, skills and manual skills?
How do you rate the importance of using a professional franchise broker?Franchise wholesalers are very important to any business looking to get a license to distribute franchises. You will be required to present at least ten prospective franchise buyers a franchisor’s credentials. If you are considering buying a franchise, you will need to meet with more than one broker. Franchise brokers may use different lists to determine outside applicants. Some are interested in large, profitable stores, that have more turnover, or require square footage that is a larger amount than a fledgling, one-person home-based operation
Can I afford the high fee for an employment contract? While a franchise broker is not in the position to give advice on employment contracts, you need to understand the implications of buying and selling an employment contract. Franchisors will try to protect their interests and make sure that they cannot get in a bind, or team of people using the same business owner without a franchise agreement.
Do I need to sign a franchise agreement?If you are approached by a broker or in relation to a potential franchise opportunity, it is a good idea to consider the franchise agreement a non-binding contractual agreement. A franchisor will attempt to protect the pokergalaxy interests which are similar to a franchise agreement but they will also make sure that they will be notified of potential franchisees before having to disclose the information, subject to confidentiality requirements. A contract to purchases or selling a franchise agreement is a legally binding agreement and should be read and reviewed by a qualified attorney to ensure that you understand the terms and conditions in advance of entering into an agreement.