Questions To Answer Before You Buy A Franchise

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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.
Some franchises are very good. They treat both the franchisor
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 franchisor sell a
second franchise in your territory?
4. is the franchisor 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 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?
11. 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?
12. If needed, will the franchisor 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 franchisor have experienced management, trained
in depth?
15. Exactly what can the franchisor do for you that you cannot
do for yourself?
16. Has the franchisor 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 franchisor 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!