Franchise businesses such as Wendy's, McDonald's and Jack-In-The-Box are
booming. The people setting up franchise ideas and businesses know a good thing,
and are really promoting this idea. Franchises for just about every conceivable
kind of business are being sold in ever increasing numbers.
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Some franchises are very good. They treat both the franchiser and the franchisee
very well. Others are very one-sided. Still others are almost total rip-offs
that trap one into paying ten to fifty times the actual value of the business
idea, equipment, or whatever it is they are trying to get you to buy.
Before putting any money into a franchise, you should investigate everything
completely. We've prepared a list of questions you should be asking, and should
get satisfactory answers to before investing.
1. Has your attorney studied the franchise contract, discussed it completely
with you, and do you both approve it without reservations?
2. Does the franchise require you to take any steps which are either illegal or
even border on illegal, or are otherwise questionable or unwise in your state,
county or city?
3. Does the franchise give you an exclusive territory for the length of the
franchise period, or can the franchiser sell a second franchise in your
territory?
4. is the franchiser connected in any way with any other franchise company
handling similar products or services?
5. If you answered yes to the above questions, what is your protection against
the second franchising company?
6. Under what circumstances can you end the franchise contract, and at what cost
to you?
7. If you sell your
franchise, will you be compensated for your goodwill or will it be lost to
you?
8. How many years has
the firm been offering you the franchise been in operation?
9. Does the company
offering you this franchise have a reputation for honesty and fair dealing
among its franchisees?
10. Has the franchiser
shown any certified figures indicating exact net profits of one or more of
its members, and have you personally checked the figures with these
people?
11. Will the
franchiser assist you with:
- A management
training program;
- An employee
training program;
- A public relations
and advertising program;
- Capital;
- Credit;
and
- Merchandising
ideas?
12. If needed, will
the franchiser assist you in finding a suitable location?
13. Is the franchising
firm adequately financed so that it can carry out its sated plans?
14. Does the
franchiser have experienced management, trained in depth?
15. Exactly what can
the franchiser do for you that you cannot do for yourself?
16. Has the franchiser
investigated you carefully enough to assure itself that you can successfully
operate a profit to both of you?
17. Does your state
have a law regulating the sale franchises, and has the franchiser complied
with that law to your satisfaction?
18. How much equity
capital will you need to purchase the franchise and operate it until your
income equals your expenses?
If you can get the
answers to each of these questions, and those answers satisfy you, then
you're probably thinking about buying a pretty good franchise deal.
However, if you're in
doubt about any of these points, be sure to check it out and know the
answers for certain before you invest or sign anything. Buying a franchise
can give you a measure of security, and in some cases, sure-fire
profits.
Business surveys show
that fewer than 20 percent of all franchised businesses fail. This is in
comparison to a 60 to 80 percent failure rate for ALL new businesses started
in this country each year. Information regarding specific franchising ideas
can be found in the franchising directories, which are generally available
at the local library. Often there will be a notice posted in franchise
outlets themselves.
If you can afford the
entry into this business, statistics are on your side. You are now armed
with some CAUTION and STOP and GO signs!
About the Author:
Isabel Isidro for Power Homebiz Guides.
Read her blog at
PowerHomeBiz Small
and Home Business Blog
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