Some franchises are extremely good. They treat the two franchisor and the franchisee well. Others are very one-sided. Still others are virtually total rip-offs that lure one into paying five to fifty times your value of the company idea, equipment, or whatever it is they making the effort to get you to invest in.
Before putting any money right franchise, you should investigate everything completely. We've prepared a listing of questions you should possibly be asking, and should find satisfactory answers to just before investing.
- Has your attorney studied the franchise contract, discussed it completely with you, and do you both approve it without reservations?
- 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?
- Does the franchise give you an exclusive territory for the length of the franchise period, or can the franchisor sell a second franchise in your territory?
- Is the franchisor connected in any way with any other franchise company handling similar products or services?
- If you answered yes to the above questions, what is your protection against the second franchising company?
- Under what circumstances can you end the franchise contract, and at what cost to you?
- If you sell your franchise, will you be compensated for your goodwill or will it be lost to you?
- How many years has the firm been offering you the franchise been in operation?
- Does the company offering you this franchise have a reputation for honesty and fair dealing among its franchisees?
- Has the franchisor 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?
- Will the franchisor assist you with: a) A management training program; b) An employee training program; c) A public relations and advertising program; d) Capital; e) Credit; f) Merchandising ideas?
- If needed, will the franchisor assist you in finding a suitable location?
- Is the franchising firm adequately financed so that it can carry out its sated plans?
- Does the franchisor have experienced management, trained in depth?
- Exactly what can the franchisor do for you that you cannot do for yourself?
- Has the franchisor investigated you carefully enough to assure itself that you can successfully operate a profit to both of you?
- Does your state have a law regulating the sale franchises, and has the franchisor complied with that law to your satisfaction?
- How much equity capital will you need to purchase the franchise and operate it until your income equals your expenses?
Buying a franchise can supply you with a measure of protection, and in several cases, sure-fire revenue. Business surveys show that lower than 20 percent of franchised businesses are unsuccessful. This is compared to a 60 to help 80 percent failure rate for all those new businesses were only available in this country each and every year.
Information regarding particular franchising ideas can be obtained from the franchising sites, which are generally available at the local catalogue. Often there might be a notice posted throughout franchise outlets on their own.
If you can afford the entry into e-commerce, statistics are in your corner. You are now armed with some CAUTION and forestall and GO signals!