Posted on Jan 11, 2011
Buying a Franchise? Why it's important to put together an A-Team
Buying into a franchise can be a great way to achieve business success - but thinking that becoming a franchisee will be significantly easier, or take less effort, than any starting a small business from scratch is a recipe for failure. It’s important to have an experienced, professional, and knowledgeable team behind you to help you understand the brevity of the financial decision that you are undertaking. While buying a franchise is often considered a safe, secure investment into a proven business model, its not without risk. It is critical that you understand what you are getting into before you buy a franchise.
Who Do I Need on My Team?
At the very least, you will need an experienced franchise consultant to evaluate the franchise business opportunities you are considering (also called a franchisee consultant or franchise business consultant). You will also need a franchise lawyer with extensive experience in assisting franchisees in reviewing the franchise disclosure documents and the franchise agreement.
Your franchise consultant will show you various franchises that could be good investment opportunities, based upon your personality, previous experience and available capital. They can also assist with market research, identifying your personal business strengths and weaknesses, and locating training programs for new franchisees to help get your new business off the ground.
Once you settle on a franchise you think you would like to invest in, your consultant will review the franchise disclosure document and franchise agreement. Please keep in mind that it is extremely important to hire a reputable, experienced franchise consultant. An inexperienced person, or a franchise consultant motivated by profits alone, could direct you towards a poor investment choice. It's always a good idea to ask your franchise consultant how they are getting compensated, just to make sure your interests are aligned.
Once you have a good idea of which franchise you would like to invest in, it’s time to call in your franchise lawyer. When choosing a franchise lawyer it is very important to ask for references of previous franchisee clients. Many business lawyers claim to be knowledgeable in franchise law, but that may not be the case. Franchise law is a specialty that varies from state to state. You will need to make sure that your lawyer is familiar with the laws in your area. You can be assured that your franchisor will have a group of skilled franchise lawyers ready to fight for franchise agreement terms that are advantageous for their client. If you hire an experienced, knowledgeable franchise attorney, they may be able to negotiate better terms for you - in regards to royalty payments, contractual loop holes, advertising and future locations of other franchises.
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