Four Tips for Anyone Thinking of Buying a Franchise

 Posted on April 19, 2023 in Business Law

When compared to starting a business from scratch, there are many advantages to buying a franchise. When you purchase a franchise, you benefit from having an established brand, systemized policies and procedures, and ongoing help from the parent company. Franchise owners are limited when it comes to the changes they can make to the business, but this is often the ideal situation for new business owners or those who want to reduce risk.

However, buying a franchise is not entirely risk-free and it is important to be mindful of concerns such as upfront capital requirements, competition, market conditions, and franchise fees.

Choose the Right Franchise for the Area

When choosing a franchise, it is obviously important to select a company that is growing and has a history of success. However, many people make the mistake of not considering the specific area in which they plan to open a franchise. Are there customers who will want to patronize the business in your area? Is the business accessible by foot or public transportation for those individuals who do not own a car? Are there competitors nearby? Make sure to consider how the unique needs of the neighborhood Influence the potential success of a new franchise.

Do Not Underestimate Startup Costs

Buying a franchise is often a more affordable option than other avenues to business ownership. However, it is important to make sure you fully understand the initial expenses you will encounter. Consider real estate costs, franchise fees, royalty fees, and equipment costs. There are a few different options for financing a franchise, including business term loans and SBA loans, but the financing option you choose will depend on your unique situation.

Make Sure You Understand the Franchise Disclosure Document

The franchise disclosure document will explain the business relationship between the franchisor and franchisee. This essential document contains information about proprietary business information, trademarks, fees, financing, and the requirements of franchisees. It is highly recommended to work with a business law attorney who can review the franchise disclosure document, help you understand your rights and obligations, and identify any red flags or vague terms in the document.

Ask About Mentoring and Training

One of the primary advantages of buying a franchise is that you gain access to the expertise of the parent company. However, each company varies with regard to how much support is provided to franchisees. When considering buying a franchise, make sure to ask about the types of training programs and ongoing support offered by the franchisor.

Contact our Fairfield County Franchise Lawyers

At Ivey, Barnum & O'Mara, LLC, we help prospective franchisees make the right decisions for their particular situation and avoid mistakes that can destroy their business ownership aspirations. Call our skilled Greenwich business law attorneys at 203-661-6000 for a free consultation.

Source:

https://www.forbes.com/sites/garyocchiogrosso/2022/09/26/10-key-points-to-consider-when-purchasing-a-franchise/?sh=9258caa68009