Franchises are not typically “get-rich-quick” schemes. If you buy a franchise, you have to know what you are getting into. Also, be prepared to run an actual business because most of the on-the-ground heavy lifting will be your responsibility. Before finalizing a franchise deal, make sure you take steps to avoid franchise disasters.
Do Your Homework
A little up-front investigation could save a lot of trouble down the road. The following areas may be important to the success of your franchise:
- Money. Of course, you will want to find out the upfront costs of buying a franchise. However, you also need to watch for recurring fees and hidden costs.
- Responsibilities. What obligations will you, as the franchisee, shoulder? It’s important to know this going in so you can assess whether the franchise is worth the effort or not.
- Support. Some franchisors offer more assistance, education, and training than others. When considering a franchise, make sure the company offers the support you
- Performance. How are other franchisees doing? A franchise offering may emphasize the positive and minimize the negative. Conduct independent research to make sure the performance of current franchisees matches the franchisor’s promises.
Territories. Will your franchise have a specific, protected territory? In some cases, as with Subway franchises, stores open in close proximity to each other which forces franchises to compete against each other for their share of the market.
In addition to doing your own research, it helps to have a professional’s advice.
Have an Attorney Review Agreements
A lengthy franchise agreement contains numerous provisions in addition to the basics of how much you will pay for the right to open the franchise. Your attorney should review any legally binding document before you sign on the dotted line. Franchise agreements might lock you into an unprofitable relationship for years.
Documents you receive from your franchisor might include important disclosures, policies, procedures, and requirements. While it is important that you read these materials thoroughly, it’s best to have an attorney review them also. Seemingly innocent language may lead to dire legal consequences. Your business lawyer will be better able to understand the legal implications of all that fine print and legalese.
Avoid Franchise Disasters by Talking a Business Lawyer
Entering into a franchise agreement is about much more than coming up with the necessary financing. You need to make sure your money goes to a worthwhile business venture and you’re you protect your best interests.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. we represent clients throughout South Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, and surrounding communities.