Why buy a franchise?

The nature of a franchise network is such that often the major problems are results of what was done or omitted at the very beginning. It is essential that the foundational documents, such as the Disclosure Document or a Franchisee Earnings Document, are clear, transparent and legally complaint. A strong legal base is an indispensable feature of a successful franchise operation.

The advantages of franchising, for franchisees, include: The negation of the need for external expertise or consultation to expand, the ability to rapidly acquire know-how and learn processes, and the benefits of being associated with the franchise’s reputation.

Are You Prepared to Purchase?

Prior to committing to a serious financial decision, consult current franchisees and ask them about these areas:

• Are they making a profit? Whilst other features of the purchase you are considering may be attractive, ensure that the bottom line is adequate.

• What hidden costs or fees have they incurred since purchasing the franchise?

• What legal issues, if any, have they encountered with their franchisor?

• How soon did they break even on their investment, and what is their current rate of growth?

• Did the franchisor provide adequate training and guidance?

• Did the franchisor make a reasonable effort to assist the franchisee in difficult times? This may take the form of direct financial relief, such as postponing or waiving fee payments, or more indirect help, such as giving sound business advice.