How to Select and Buy a Franchise

Buying a franchise is a quick way to jump into a business of your own, but there are several things you must consider before becoming a franchisee.

Instructions

Difficulty: Easy

Things You’ll Need:

• Internet access
• Computers
• Spiral notebooks
• Business loans
• Applications

1. Determine what type of business you want to own: food, business service or products.
2. Study the available franchises in that category.
3. Contact the franchise headquarters of the companies you are interested in owning. Ask for a franchisee information packet.
4. See what the requirements are for purchasing a franchise.
5. Talk to owners of franchises that you are interested in. Ask them what sort of problems they have had with the franchisors and with the franchise agreement; what should a new franchisee be aware of; and what would they change if they could do it over again?
6. Review the franchisee/franchisor agreement. The agreement should protect both parties and still allow them to conduct their businesses in a manner that will be profitable.
7. Fill out the franchisee application.

The Franchise Agreement

8. The franchise agreement should state the term of the franchise.
9. It should also state the terms under which the agreement can be extended, revoked, terminated, sold or transferred.
10. The franchise agreement should discuss the delineation of fees and other considerations to be paid by the franchisee and for how long.
11. It should have information regarding training and territory (is it specific and exclusive?).
12. The agreement should state whether the franchisor supplies goods, stock, equipment and staff.
13. The initial fee and continuing payments should be stated.
14. The franchise agreement should also have information on performance requirements, including how long are they are enforced and what happens if they are not met.
15. The agreement should state whether prices are set by the franchisor.
16. And it should say what happens if the franchisee dies or becomes incapacitated.

Tips & Warnings

• The agreement should take into consideration all that can, could, should and should not happen.
• Stay away from franchise agreements that do not last long enough for the franchisee to recoup their investment.