Before You Buy a Franchise

Before You Buy a Franchise
Before buying a franchise, there are several things to consider including the amount of money
you have to invest, your skills and abilities, and the goals you have set for yourself. The table on
the next page will guide you through some of the things you need to consider in order to make a
sound decision.
Caution! Read the Franchise Offering Carefully!
Franchise offers are written to convince prospective buyers that they should sign on the dotted
line and send in their franchise fees as soon as possible. Proceed with caution. It is not always
true that, “He who hesitates is lost.” I periodically read franchise offers for clients and have
discovered that they range from very simple to very complicated. The common denominator is
that by law the franchisor is required to disclose somewhere in the document certain pieces of
information that will allow you to perform a fairly accurate picture of the viability of the
franchise opportunity.
It is important that you read between the lines. Don’t just look at revenue projections. Chart out
all of the possible financial requirements that may be imposed on you by the franchisor during the
opening and operating of the franchise – royalties, advertising, training, insurance, etc. If you are
not careful, you can find yourself caught in a contract full of legal obligations that eat heavily into
your profits.
Finally, be sure that there is a sufficient demand for the products or service in your geographic
location. What works in one part of the country may not be feasible in another, either financially
or otherwise. Talk to current franchisees to see how things are working out for them and what
level of support they are receiving from the franchisor.