How to Purchase a Laundromat Franchise
If you want to start a successful laundromat, you do not have to start from scratch. Most small businesses fail at least partly because the entrepreneur does not have experience in all of the various areas that are critical to the success of any small business - human resources, marketing, sales, legal issues, accounting, and customer service, and others. If you have the money, purchasing an existing laundromat franchise could be your solution. Laundromats generally offer a high return on investment, and are relatively recession-proof. Franchising offers you training in business methods that have already been proven, and a brand name that already has a reputation.
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Instructions
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Download the guidelines for the Uniform Franchise Offering Circular (see Resources) and become familiar with them. The franchisor is required by law to provide you with the disclosure documents described therein before you sign a franchise agreement. Understanding them will give you an idea of the business risks that you will be assuming by signing a franchise agreement.
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Investigate potential locations for your laundromat. Good choices include areas near universities, apartment complexes and low-income neighborhoods, because most of your customers will probably be students and other people who either lack the space or money for a washer and dryer. You should also check municipal zoning and business license requirements. Your franchisor will provide assistance in this regard, but it is best for you to do some of the initial research yourself, especially if your franchisor doesn't have an outlet in your city.
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Choose no more than four or five laundromat franchisors to contact. When selecting potential franchisors, you will need to consider brand reputation, number of years in business, the number of franchise units locally, nationwide and worldwide, how much money you will be required to invest upfront, and your minimum total investment. Remember that laundromats typically require a large up-front investment, but day-to-day operating costs are relatively low (especially in the case of coin laundries).
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Contact the laundromat franchisors you have selected and request information on establishing a new franchise. In particular, inquire about training (both initial and continuing) and equipment and remodeling requirements. It is particularly important to know whether you have the option to either buy or lease your machines, because this will affect the size of your initial investment. You should also request a copy of their standard franchise agreement, although you shouldn't be surprised if they refuse to provide it this early in the process. Be prepared to answer any of their inquiries about your business experience with documentary evidence.
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Examine each franchisor's standard franchise agreement. Check out the website of the American Franchisee Association for a discussion of common pitfalls in franchise agreements and compare them with the terms of each sample franchise agreement. Many standard franchise agreements contain serious restrictions on your ability to operate a laundromat after the termination of the franchise. Some may require you to buy or lease laundry equipment only from the franchisor, or to sublease your premises from the franchisor. Suggest modifications to any unfair or oppressive provisions, and walk away from any franchisor who exhibits an inflexible attitude.
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Choose the best franchisor and negotiate a franchise agreement. You should consider retaining the services of a franchise consultant to help you negotiate with the franchisor. A list of laundromat franchisors is provided on the website of the International Franchise Association (see Resources) and elsewhere on the Internet.
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Tips & Warnings
Consider joining the American Franchisee Association (AFA) and the International Franchise Association (IFA) after you purchase your franchise. The AFA is a support organization for franchisees (not franchisors) which will help you learn how to stand up for your rights in the face of a franchisor that has more bargaining power than you do. The IFA is a good source for networking opportunities and industry information.
Have your attorney check over the contents of your franchise agreement before you sign it. It is certain that the franchisor will be represented by an attorney, and if you sign a franchise agreement without a full awareness of its legal implications, you could be in for unpleasant surprises down the road.
