If you have ever dreamed of owning your own franchise, what are you waiting for?
There are two main types of franchises; business format franchising and product/trade name franchising. Make sure you do your research, know your rights and know what needs to be disclosed to you prior to investing into anything.
If you’re concerned about the risk or not sure what type of franchise to get into, below are some tips to help you out:
The decision to purchase a franchise involves many factors. To help you explore if franchising is right for you, consider the following questions:
- Do you know how much you can invest?
- What are your abilities?
- What are your goals?
You need a strategy before investing in a franchise. Doing your homework about the franchise first will help you gain a solid understanding of what to expect as well as the risks that could be involved.
- Be a Detective In addition to the routine investigation that should be conducted prior to any business purchase, you should be able to contact other franchisees before deciding to invest. You can obtain a Uniform Franchise Offering Circular (UFOC), which contains vital details about the franchise’s legal, financial, and personnel history, before you sign a contract.
- Know What You are Getting Into Before entering into any contract as a franchisee, you should make sure that you would have the right to use the franchise name and trademark, receive training and management assistance from the franchisor, use the franchisor’s expertise in marketing, advertising, facility design, layouts, displays and fixtures and do business in an area protected from other competing franchisees.
- Watch Out for Possible Pitfalls: The contract between the two parties usually benefits the franchisor far more than the franchisee. The franchisee is generally subject to meeting sales quotas and is required to purchase equipment, supplies and inventory exclusively from the franchisor.
- Seek Professional Help The tax rules surrounding franchises are often complex, and an attorney, preferably a specialist in franchise law, should assist you to evaluate the franchise package and tax considerations. An accountant may be needed to determine the full costs of purchasing and operating the business as well as to assess the potential profit to the franchisee.
Now that you have a better idea of what you need to look at before investing into a franchise do you feel more confidant about making a final decision?