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Buying Into a Franchise? Your Checklist!

When you are buying into a franchise, you are legally buying the right to use a specific trademark or business concept, which has been tested by the franchisor prior to franchising. The chief benefit of you investing in a franchise rather than a start-up or independent business, is that you are able to capitalize on the proven business model, trade name, brand and full support system provided by the franchisor. There are a number of central questions you should ask a franchisor about before buying into a franchise or business opportunity...

Here is a simple checklist you can print off and use when you are assessing a franchisor and a franchise opportunity. You can circle the answers that are appropriate to your situation.

1. Does the franchisor have a track record of success? How long has the franchisor been in business? (the longer in business the better the business system...)

Yes No
less than 3 years 3 years 5 years+
2. What will it cost me?
Initial Fee? Royalty Fee? On-going fees?
3. How much can I expect to make in my first year/couple of years in operation?
1x Current Income 2x Current Income More? How much?
4. Will the franchisor give me exclusive territory rights for the period of the franchise?
Yes No
5. Will the franchisor assist me with: (a) An initial training program?
Yes No
(b) An on-going training program? On-going support?
Yes No
(c) A PR and advertising (marketing) program?
Yes No
(d) Help with raising financial funds?
Yes No
(e) Choosing location/premises?
Yes No
(f) Finding reputable suppliers/distributors of products and services?
Yes No
6. Has the franchisor a good reputation with existing franchisees? Can I talk to existing franchisees?
Yes No
7. What happens if I want to leave/give up the business? Can I sell the business to anyone I like?
Yes No
8. Has the franchisor shown me his/her Uniform Franchise Offering Circular? Have I double checked certified financial figures with the franchisor and franchise attorney?
Yes No
9. Is my franchise attorney completely happy with the terms of the Franchise Agreement (which are in my best interests)?
Yes No
Once you have ticked a "yes" answer to all of these questions and discussed all relevant details with the franchisor, existing franchisees and your franchise attorney, you should be quiet happy to sign the Franchise Agreement. Use this reference as a guide when you are contacting a franchisor and when you are interested in investing in a franchise opportunity... Need more advice? Check out my next blog installment on "Becoming a Successful Franchisee- Checklist".... Franchise Reporter
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