What does it take to own a franchise? In many ways, the responsibilities of a franchise owner align quite similarly with those of a small business owner. Even though they are essentially the same, the franchise owner starts off with a few more advantages.
There are many franchise concepts and some of them offer a type of product or service that connects directly with the customer. Depending on which franchise you choose, you could be very involved with the public on a daily basis. If you don’t have the patience or personality to deal with complaints, demands and the occasional attitude, then you might want to look for a franchise that does not need you on the front lines. Carefully understand the outline of your responsibilities and don’t settle for something you aren’t passionate about.
As an owner you need to make sure you have a strong team of employees, so you need to prepare for effectively training and motivating your team. The franchisee’s training and on-going support will come from the franchisor; however, the franchisee must pass on his or her knowledge and use it to better their individual operation. (more…)
As with any major investment, the best decision can be made only if you’re as informed as possible. You need to spend a good deal of time researching, interviewing and exploring your options — and a part of the process is determining what the legal and financial aspects are.
As your focus gets more serious with the idea of owning your own franchise, you need to genuinely look at your financials and propose a budget with which you feel comfortable. Research the many options you have, like the Self-Directed 401K option or loans. Financing a franchise may be considered a lower risk investment, mostly because franchises have proven track records and an established trademark and brand. That being said, it is still crucial that you prepare an in-depth business plan and explore a range of options so you commit to the one that makes the most sense for your budget. (more…)
With over 3,000 choices of franchise concepts in the marketplace today, your options for owning your own business are limitless. But not all franchises are created equally.
Say hello to the Franchise Disclosure Document, or FDD for short. Quite simply, it’s a legal document mandated by the Federal Trade Commission (FTC), designed to assist the potential franchisee through the due diligence process. Every legitimate franchise must produce one. If a company doesn’t, remove yourself from discussions as quickly as possible. At its core, the FDD removes any emotion from the process.
Under FTC guidelines, the FDD must be presented to the potential buyer in the pre-sales process no less than 10-14 days prior to entering a contract or paying any amount of money for a franchise. Regardless of the type, size or scope of a franchise opportunity, the FDD follows a strict format. FDD’s are uniform and consist of 23 specific items. Expect to see franchise fees, initial investment totals, trademarks, assigned territories, renewals, restrictions and advertising efforts. (more…)
How many of you have spent your career advancing to the Executive Suite, only to find out it was not what you really wanted? Or, perhaps the company to which you devoted the majority of your career was sold, merged… or just decided they did not need your position anymore?
That happened to me. I got the education I needed to be successful in Corporate America, and I worked my way up the career ladder. But, I have to tell you: I was not happy with what I found there. I had no work/life balance, and what good does it do to live in paradise if you can’t find the time to enjoy all it has to offer?
In 2007, I was downsized. It was the best thing that could have happened to me! While I started out looking for another job, I just could not get excited about anything I found. Fortunately, I was introduced to franchising. Like you, I once believed that franchises were all fast food or retail stores. I thought that I couldn’t afford to buy one. I was afraid to be a business owner because I didn’t think I had the experience to succeed as a business owner. I was very mistaken! (more…)
After you have narrowed your search for a franchise business to THE ONE that best fits your personal and professional goals and financial resources, it’s time to engage the services of a qualified franchise attorney to review the associated Franchise Disclosure Document (FDD) and the franchise agreement contained therein. While you might be tempted to hire an attorney at a far earlier stage in the due diligence process (let’s be honest: navigating through an FDD is far from “reading for pleasure”), the investment is not warranted until you are ready to become part of a particular franchise system.
The Value of a Franchise Attorney
The Federal Trade Commission requires that the FDD be written in “plain English.” No such restrictions pertain to the franchise agreement itself, however. You will want an attorney, who is experienced in franchise law, to review the contract to ensure that it is within the norms for franchise agreements, which are notoriously slanted for the benefit of the franchisor. If there are some provisions that need adjusting, your attorney can negotiate those on your behalf. Additionally, your franchise attorney can help you determine the best legal entity for your franchise business, as well as assist you with the numerous other legal matters that accompany business ownership. There is no standard fee for the review of the FDD and franchise contract, and they can be wide-ranging. So, be sure to ask before engaging your attorney’s services. (more…)