How To Begin A Small Business Franchise Opportunity
September 24, 2008
There are benefits, responsibilities, costs and risks in establishing a small business franchise opportunity. There are many important steps along the way to consider when researching a franchise business. If you complete those steps thoroughly, you can be confident on becoming a member of a growing, healthy franchise system.
Here are some major do’s: do you want to be in business full-time, part-time or with your family, thoroughly investigate the company, appraise the business to determine if it is a good fit for you, deal only with well established, well-financed and successful franchisers, and ask for assistance from a lawyer and an accountant.
When the word “franchise” comes up, the first thing that usually comes to mind is a franchise in the fast food business. Today the selection of a franchise can be from a computer in your home to a stable at a farm. Therefore, the fees cannot be compared as a ‘one size fits all’ as they have been for years.
Along with the new world of multi franchising, there also come new and different rules. Here are some rules regarding territory restriction. A franchisor may limit your ability to have your own website, which could restrict your ability for online customers, and you cannot compete with the same customers, or move to a more profitable location.
Continuing with additional don’ts: permit any “expert” to decide for you whether or not you should buy any franchise, hesitate to walk away from a deal that is not a potential home run, rely on the seller’s evaluation of inventory and any other asset, and don’t overlook comparing what you can do verses a franchisee.
The Federal Trade Commission’s Franchise and Business Opportunity Rule requires franchise and business opportunity sellers to give you specific information to help you make an informed decision. The seller must give you this disclosure document at least 14 business days before you commit yourself legally. This is a great safe guard.
If you are pressured in anyway during your conversations, take those tactics as a signal for caution. For example, if you are told, “because prices will go up tomorrow,” or “another buyer is very serious about this deal,’ remember a good seller doesn’t use high-pressure tactics. Time reveals the truth to everyone.
If the seller does not give you a disclosure document check with your attorney or accountant. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to help the consumers. Check with a professional before you sign any documents.
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