If you want to own a business, buying a franchise might be the best way to make that dream come true.
Opening any new business takes a great idea, time, and money. Buying an already existing business is a great way to cut down on all three of those stress factors.
Buying a franchise is essentially buying an already establishing brand and business model.
Some popular franchises include Dunkin’ Donuts, Auntie Anne’s, Super Cuts, Subway, Days Inn and many more.
Before buying a franchise, research the company and the expenses that will be associated with operating a franchise.
One of those first and most important factors to determine if buying a franchise is a good idea for you is to consider your finances. If you have adequate money to invest in the business on your own, buying a franchise will be a considerably easier than if you have to take out a loan for the start-up costs.
Most franchises will have non-refundable franchise fees that can range from several thousand to several hundred thousand dollars. Additionally, you’ll need to buy any necessary inventory and equipment needed in order to operate the franchise.
By researching each franchise, you’ll be able to determine how involved you’ll need to be in operating the business. Some franchisors require franchisees to manage the franchise themselves, while others allow franchisees to be less involved as a passive investor.
Franchisors also have the ability to impose their business plan on any or all aspects of the company, ranging from price of products to appearance.
Franchise opportunities are available in almost every field, so finding the right franchise for you could take some time and legwork.
After you’ve decided on an industry and a franchise, consider how successful you will be in the field and determine whether the results will satisfy your goals in owning a franchise.
Some franchisees buy a franchise to be their own boss, while others are solely motivated by the potential profit.
If you are buying a franchise for the profit, make sure that you have a good grip on how much money you can potentially earn. Factor in royalty payments, advertising fees, equipment and products, employee costs and paying back loans.
When you decide to purchase a franchise, the franchisor and franchisee will sign a Franchise Agreement that will outline the business relationship between the two parties.
Before signing any contracts, the franchisor must provide the franchisee with the Uniform Franchise Offering Circular (UFOC) which contains disclosures about expenses, financial statements, and any other important information about the franchise. You should have an attorney review this document before signing any contract to be sure the terms are legal and fair.
Failing to have an experienced business law attorney look over any franchise documents could result in legal problems down the road such as post-term competition and other franchise-related complaints.