"Buying" A Franchise
Here at FranchiseHelp we’re constantly asked about the opportunity to buy a franchise. Unfortunately I’m going to have to tell you something that might disappoint you. You can’t “buy” a franchise. In reality you are engaging in a “leasing” transaction rather than a “purchasing” transaction. Why is it a lease? In any franchise deal, the franchisee receives the assets up front, but only for a period of time - the term of the franchise agreement. The term of the agreement may run for five to ten years, or in some cases it may run for as little as a year or two. At the end of the day the renewals of these agreements are at the option of the franchisor, and the reasons for not renewing an agreement should be completely spelled out in the Franchise Disclosure Document (FDD) and franchise agreement.
So what doe it means that you are leasing and not purchasing? This might not influence your decision to become a franchisee, but you should definitely keep this in mind while you are analyzing your choices and negotiating with potential franchisors.
There are other important considerations as well. First, you must determine if you would function well as a franchisee. If so, you then have to choose the right franchise among the 3000+ franchise opportunities out there. That’s only the beginning. After you whittle your franchise choices down to, maybe, a half dozen, you must then thoroughly investigate each opportunity. Once the choice is made, your job is to analyze and understand the franchise agreement and, if possible, negotiate the agreement so it is satisfactory for both you and the franchisor. Finally you need to put together a financial package to fund your franchise investment.
We put together this site to help you understand the ins and outs of the franchising process and to help you identify the perfect franchise for you. Click below to start exploring the franchising process.
Steps to improve the franchisee's profitability
Topics to be covered in this strategic audit should include at a minimum these ten (10) items:
Franchise Financing Options
Recently I've received a few questions from our users about what their options are when it comes to financing their franchise. So I figured it might be a good idea to put together a quick post outlining some of the options out there for financing your new franchise.