Before you make the final decision of buying a franchise business, make sure you have thoroughly understood the franchise concept. Consult an attorney, preferably one with experience in this area, to help you make understand the disclosure document and contract. Any entrepreneur who wishes to do serious business will never enter into an important business relationship without consulting an attorney or someone who understands business formalities.
Here is some checklist that needs to be following before buying a new franchise business:
• Check out properly to find out whether the franchise company is having proper registration or not.
• Careful analysis of the financial statements in the franchise agreement as it will give you a clear picture about the franchisor's strengths and weaknesses.
• Find out the risk factors of the new franchise business that are mostly outlined in the legal documents. This is important to analyze the important factors that may make the business venture risky or speculative.
• Find out details from the franchisor how many businesses have been operating within the franchise network; the names, addresses, and phone numbers of existing franchisee and the exact turnover of the company.
• Also try to get information about the history of the new franchise business, sellers, directors, sales representatives and affiliates.
• Ask for a market study of the products or services that the franchise business is dealing with.
• Get information about the special training necessary for running the franchise business and whether the franchisor would be providing the same or not.
• Find out what will be your total outlay and how much the product will or new franchise business cost you. Are there initial fees, deposits, or down payments?
• It is also essential to find out beforehand whether you can terminate or modify the franchise agreement.
This franchise checklist will definitely help you in making the right decision. Finally, while buying a franchise business, you must make sure to take the help of some expert or attorney.
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4 comments:
With the vast range of franchise business opportunities available, it is very tough to choose the right and the best one. It is always better to invest in the franchise which has a great reputation in the market and gives a chance to earn a lot of money.
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