What Should I Consider Before Getting Involved in a Franchise Operation?

One way to break into a market is to buy a franchise. Whether it is a shipping store, a dog walking service, or a fast food restaurant, a successful franchise offers benefits like instant name recognition and training and support. As with any other business opportunity, opening a franchise location does not come with any guarantees. A franchisee’s success or failure will depend on a number of factors, and anyone who is thinking about becoming a franchise owner should carefully evaluate the business opportunity before signing any contracts. An experienced Monmouth County business attorney represents both franchisors and franchisees in all aspects of franchise law and will help you evaluate and complete your franchise purchase.

Things to Consider Before Buying a Franchise

Franchise operations are everywhere, though some franchise opportunities are better than others. Before buying into any franchise, you should determine if it is a wise investment by considering the following questions:

  • What are the upfront costs?
  • What fees will I be required to pay on an ongoing basis?
  • How does the franchisor make money? Does the franchisor have its own locations? Are the franchisor’s profits fee-driven?
  • Are there any restrictions on suppliers?
  • How many franchisees fail within a year? Within two years?
  • How many franchisees sell within a year or two? What is the resale value?
  • Does the franchisor offer any guarantees that no other locations will open within my geographic region? For how long?
  • If other franchise locations will be in my geographic region, will I have priority in terms of buying them?
  • Does the franchise have a proven track record that shows the business model works?
  • Does the franchise manager have ample business experience? In this particular industry?
  • Is my geographic region right for this type of business? How big is the potential customer base? What type of advertising will I need to do in order to reach that customer base?
  • What options will I have for getting out? Am I allowed to sell? Are there restrictions on to whom I can sell? Are there any fees associated with selling?

Before you get involved in a franchise operation, especially if purchasing a franchise will be your first foray into business ownership, carefully evaluate the opportunity to make sure it is a sound investment and the right one for you. If you need help buying, starting, selling or expanding a franchise, contact a qualified Monmouth County business lawyer today.