A franchise is a possible choice if you want to start a new business. A franchised business comes with many benefits.
If you own a franchise, you also must pay specific fees and comply with other obligations to stay in good standing. Before buying a franchise, you should research the franchisor and the opportunity thoroughly.
Request earnings documentation
As part of its disclosures to you, a franchisor will make representations about the kind of earnings you can expect as a franchisee. It would help if you asked the franchisor for the detailed accounting records that support their earning claims. You will want to compare your location to one of a similar market.
Review all disclosures carefully
Under federal law, a franchisor must file a disclosure statement and give potential franchisees a copy. This document should provide detailed information about the franchisor and the business opportunity. The disclosure statement should also clarify your obligations as a franchisee.
Talk to other franchisees
The disclosure statement will provide information about other franchisees. You should contact some of these business owners to find out information about their experience with the franchisor, including the franchisor’s willingness to provide the support as specified in the disclosure statement. You will also want to know how much success the franchisees have had with the business model.
Starting a business is a significant investment for most entrepreneurs. You will likely invest many hours to get the enterprise up and running. You want to ensure the franchisor will honor its obligations and that the opportunity offers a real chance for success.