Resources

20 Questions for a Franchise Buyer for Successful Franchise Investment
Resources

20 Questions for a Franchise Buyer for Successful Franchise Investment

As a franchise buyer, how do you prepare for Discovery Day or the day you first meet your franchisor? Most of the time, the face-to-face meeting happens at the headquarter, a place you are not familiar with, which adds to little nervousness. Not always, though, if you are a smart buyer.  At this meeting, you discuss with the franchisor everything about their business, the growth opportunities, the cost, any existing litigation and various other factors. Remember, this is not another job interview where you answer questions without asking any or by getting too intimidated by the flash and glow of everything. So, for Discovery Day, we've got you 20 questions that you must check with your franchisor on the first day of the meeting. Competitor Check: Find out from the horse's mo...
Federal Franchise Law: Outline, Regulation, Violation
Resources

Federal Franchise Law: Outline, Regulation, Violation

Franchise law at the federal level is complicated and subtle. Additionally, franchising laws differ by state. To gain a thorough understanding of the legal requirements for franchising or franchising, you need to consult an experienced business and franchise lawyer in your neighborhood. Meanwhile, it may be beneficial for you to familiarize yourself with some of the fundamentals of federal franchising law. Franchise as Per Federal Law The United States Federal Trade Commission regulates franchising (FTC). The Federal Trade Commission defines a franchise as an ongoing business connection or arrangement that consists of three critical components: A franchisee is granted the right to operate a business or distribute goods or services bearing the franchisor's brand. The franchiso...
Don’t Let a Franchisor Bait you with a Promise of Earnings
Resources

Don’t Let a Franchisor Bait you with a Promise of Earnings

Most people are drawn to owning a franchise because of the potential financial rewards of being members of an established company or franchise system. If a franchise promises a certain profit or other financial information, prospective franchisees will know more about the business model. A realistic view of the return on your investment in a franchise can only be achieved by assessing earnings promises with diligence. Clarifying Promise of Earnings Item 19 in the Franchise Disclosure Document (FDD) mentions a franchisor's promise of earnings or other financial performance representations (FPR).  Such promise must be backed by evidence. The claim must also include: The source and limits of the supporting data Assumptions used to make the claim Data must back a guarantee of ...
Important Clauses that Must be on your Franchise Agreement
Resources

Important Clauses that Must be on your Franchise Agreement

As a potential franchisee, you should make sure that you thoroughly grasp the terms of your franchise agreement, which is the most crucial document you will sign when starting a business. Ensuring a comprehensive agreement will help you get your new business off to a good start. An Overview of Franchise Agreement  Franchise agreements are contracts in which a franchisor gives you, the franchisee, permission to use their trademarks and do business under their name. This permission is granted by signing a franchise agreement. You're allowed to use an existing business name as long as you adhere to the terms of the agreement. The franchisor is Taco Bell, and you are the franchisee operating a single chain site if your goal is to build a Taco Bell. There are several similarities betwe...
How to Evaluate a Franchise Opportunity?
Resources

How to Evaluate a Franchise Opportunity?

There is no such thing as a one-size-fits-all franchise. Entrepreneurs considering franchising must consider their financial constraints and the franchiser's support system during the evaluation phase. Below are some basic guidelines to help you evaluate a franchise opportunity. Fees and Set-Up Costs for Franchise Each franchisee charges an initial fee. This can cost anywhere from a few hundred to several hundred thousand dollars. Ideally, the franchise fee would be self-funded (though some franchisers offer financing options). In either case, we recommend starting with a minimum investment of $10,000. Profitability When evaluating a business investment, it's critical to determine whether the opportunity is financially viable. Calculating a franchise's profitability is not an exact...
Understanding Franchise Business Model and Benefits
Resources

Understanding Franchise Business Model and Benefits

A franchise is an authorization granted by a business or the government to an individual or a group to engage in certain commercial activities or act as an agent for another business. Nowadays, there are several franchise business models for an interested entrepreneur. It is important to understand the type and investment each franchise business model incurs for the best ownership decision. Types of Franchise Business Model Product Franchise This franchise refers to the customer-supplier relationship between a dealer and a supplier in which the dealer acts as a supplier. The franchisor trains the individual who purchases a franchise in product specifications, promotional techniques, service techniques, and brand-exclusive image knowledge. Joint Venture A joint venture agreement is...