Are You Taking The Leap Into Franchising?

There are more than 3,000 franchises in the United States; the vast majority are unknown to the average consumer. Many entrepreneurs consider buying a franchise due to brand recognition and access to turn-key operations. However, there may be many pitfalls to becoming a franchise that many entrepreneurs fail to consider before entering into a franchise agreement. The following are some key issues to consider before taking the leap into franchising:

• Is it a good business opportunity? Even if you are buying a franchise, you need a business plan. Franchisors often provide information that can be inserted into your plan, but you should not rely on the franchisor. You need to analyze your own market and consider enlisting professional help.
• Who is the franchisor? Entrepreneurs should ask questions related to the business model, the uniqueness of the product or service, competitors, long-term value, marketing support provided, royalties and franchise fees, and hidden costs such as rents and annual meeting requirements.
• What do other franchisees say? You should consider talking to past and current franchisees to discuss their experiences.
• What does it cost? Federal law and most states require that you receive a franchise disclosure document and franchise agreement that discusses all fees and costs, past performance, and other relevant financial and legal information. Review of these documents should not be taken lightly, and it is highly suggested to have an experienced franchise law attorney review the documents.

If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and have more questions about franchising, call (800) 734-9900 or  clubassist@amerilawyer.com for assistance. Remember, as a member of the  General Counsel Club, you receive unlimited legal, business, credit and tax  advice all year long.