Eighteen necessary facts you should know
when considering a franchise business

There are many outstanding opportunities in the franchise business field covering everything from fast-food to health clubs; the list of different opportunities is almost endless…

Since your financial future is at stake be sure and answer these questions before taking the leap into today’s business marketplace:

• Has your attorney studied the franchise contract, discussed it completely with you, and do you both approve it without reservations?

• 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?

• Does the franchise give you an exclusive territory for the length of the franchise period, or can the franchisor sell a second or third franchise in your territory?

• Is this franchisor connected in any way with any other franchise company handling similar products or services?

• If you answered yes to the above question, what is your protection against the second franchising company?

• Under what circumstances can you end the franchise contract, and at what are the costs to you?

• If you sell your franchise, will you be compensated for your goodwill or will it be lost?

• How many years has the company offering you the franchise been in operation?

• Does the company offering you this franchise have a reputation for honesty and fair dealing among its franchisees?

• Has the franchisor shown you any certified figures indicating exact net profits of one or more of its members, and have you personally checked the figures with these people?

• Will the franchisor assist you with:

• A management training program?

• An employee training program?

• A public relations and advertising program?

• Capital?

• Credit?

• Merchandising ideas?

• If needed, will the franchisor assist you in finding a suitable location?

• Is the franchising firm adequately financed so that it can carry out its stated plans?

• Does the franchisor have experienced management, trained in-depth?

• Exactly what can the franchisor do for you that you cannot do for yourself?

• Has the franchisor investigated you carefully enough to assure itself that you can successfully operate at a profit to both of you?

• Does your state have a law regulating the sale of franchises, and has the franchisor complied with that law to your satisfaction?

• How much equity capital will you need to purchase the franchise and operate it until your income equals your expenses?

Current business surveys show that fewer than 20 percent of all new 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.

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