How to
Choose a
Franchise
You'd like to go into business for
yourself, and believe that the best way for you to become your
own boss is to buy a franchise. You know it will takes time and
money to be successful, and that's OK. But which franchise
should you buy? Which makes the most sense for you?
Here are some criteria that can
help you make your decision:
-
What products or services
would you enjoy selling?
What industries do you like, or dislike? Your best
bet is to find a franchise in an industry you know at
least a little bit about. All too typical is the case
of the Chicago car salesman who decided to change
careers and go into business for himself. He bought a
basement waterproofing franchise but then found the
business boring. He wanted to sell it, but sales
weren't as high as he had expected they would be and he
had trouble finding a buyer. He was stuck paying off
the franchise fee and working at a business he didn't
enjoy.
-
How much money do you have
available to invest?
The amount of money you have available to invest in
a franchise is an important factor. If you've only got
$30,000 and the minimum investment for a specific
franchise opportunity is $90,000, the opportunity isn't
going to be right for you, no matter how much you like
the company.
-
What's the total cost of
purchase?
The franchise fee won't be your only expense. Find
out what you can expect to pay for advertising,
training, inventory, insurance, and all other costs in
addition to the franchise fee and royalties.
-
How well established is the
franchise?
How long has the franchise been in existence? Have
they been in business for many years or are they
brand-new? How many other franchises have they opened
and where are they located?
-
How stable is the
franchise?
What is the background of its officers? (Any history
of litigation or bankruptcy of the franchise or its
officers is supposed to be included in the disclosure
document.)
-
What kind of track record does
the franchise have?
Have most of their franchisees been successful?
Names and addresses of franchisees in your state should
be provided before you sign any contract. Call the
people on the list and ask about their experiences.
-
What training is
available?
Ask what training and support will be provided as
part of your franchise fee. Will you get step-by-step
instructions and hands-on training? What kinds of
manuals and other materials will you get?
- How close to your store can
the franchisor let another franchisee set up
shop?
-
Will you be required to
purchase supplies or products from the parent
company?
If so, compare your cost to the local retail prices
of the same goods. There have been instances where the
price from the franchise company for goods was higher
than the price of the same goods in local retail
stores. Selling anything under such conditions would be
quite difficult.
-
What do the contract terms say
about ownership? Can you sell out to someone else if
you wish?
If you want to continue when the contract expires,
will it be automatically renewed? Will you be able to
convert your store into an independent operation if you
should want to?
-
Determine how disputes will be
handled should they arise.
Watch for clauses requiring arbitration in the
franchisor's home state if it is different than yours.
Should a dispute arise, you'd have to travel to that
state for arbitration hearings.
-
What criteria does the
franchise use in selecting franchisees?
Do they do any screening? Or, do they seem more
interested in getting your franchise fee?
- Does the franchise use
high-pressure sales techniques to get you to sign on the
dotted line?
- Do you like the people you are
dealing with?
- How big is the market for the
franchise's products or services in your area and how much
competition is there now?
Janet Attard is the author of The Home
Office and Small Business Answer Book. Find additional
practical tips on choosing and buying a franchise at
http://www.franchisetrade.com
| Article Source: http://www.ezinearticles.com
| 
