Seven Secrets To Buying A Franchise

Seven Secrets To Buying A Franchise



Seven Secrets to​ Buying a​ Franchise
There are great benefits to​ owning a​ franchise .​
You often can sell goods and services that have instant name recognition and can obtain training and ongoing support to​ help you succeed .​
But be cautious before you sign on the dotted line .​
1 .​
Know How Much You Can Invest - a​ franchisor may tell you how much you can afford to​ invest or​ that you can't afford to​ pass up this opportunity .​
Before beginning to​ explore investment options, consider the amount you feel comfortable investing and the maximum amount you can afford .​
2 .​
Know What Type of​ Business is​ Right for You - a​ franchisor may attempt to​ convince you that an​ opportunity is​ perfect for you .​
Only you can make that determination .​
Consider the industry
that interests you before selecting a​ specific franchise system .​
Ask yourself the following questions: Have I​ considered working in​ that industry before? Can I​ see myself engaged in​ that line of​ work for the next twenty years?
3 .​
Realistically Evaluate Your Own Background and Skills - If the industry does not appeal to​ you or​ you are not suited to​ work in​ that industry, do not allow a​ franchisor to​ convince you otherwise .​
Spend your time focusing on those industries that offer a​ more realistic opportunity .​
4 .​
Take the Time to​ Comparison Shop — Talk to​ or​ visit several franchisors engaged in​ the type of​ industry that appeals to​ you .​
Get answers to​ the following questions:
• How long has the franchisor been in​ business?
• How many franchised outlets currently exist?
• Where are they located?
• How much is​ the initial franchise fee and any additional start-up costs?
• Are there any continuing royalty payments?
• How much?
• What management, technical, and ongoing assistance does the franchisor offer?
• What controls does the franchisor impose?
5 .​
Get Substantiation for Any Earnings Representations — Some franchisors may tell you how much you can earn if​ you invest in​ their franchise system or​ how current franchisees in​ their system are performing .​
Be careful .​
The FTC requires that franchisors who make such claims provide you with written substantiation .​
Make sure you ask for and obtain written substantiation for any income projections, or​ income or​ profit claims .​
If the franchisor does not have the required substantiation, or​ refuses to​ provide it​ to​ you, consider its claims to​ be suspect .​
6 .​
Avoid High Pressure Sales Tactics — You may be told that the franchisor's offering is​ limited, that there is​ only one territory left, or​ that this is​ a​ one-time reduced franchise sales price .​
Do not feel pressured to​ make any commitment .​
Legitimate franchisors expect you to​ comparison shop and to​ investigate their offering .​
a​ good deal today should be available tomorrow .​
7 .​
Study the Franchisor's Offering — Do not sign any contract or​ make any payment until you have the opportunity to​ investigate the franchisor's offering thoroughly .​
The FTC's Franchise Rule requires the franchisor to​ provide you with a​ disclosure document containing important information about the franchise system .​
Study the disclosure document .​
Take time to​ speak with current and former franchisees about their experiences .​
Because investing in​ a​ franchise can entail a​ significant investment, you should have an​ attorney review the disclosure document and franchise contract and have an​ accountant review the company's financial disclosures.




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