The FTC recommends: (1) start by examining your own financial capabilities in light of the risks; (2) research and understand the marketplace of franchising, including the franchisor’s experience and the competition; and (3) assemble an informal panel of trusted advisors to help you make the decision.
When a franchisor is acquired by an investment banker or investment firm, several potential issues may arise for both the franchisor and the franchisees. Not all acquisitions lead to problems, but it's good to be aware of potential issues. Here are some concerns that may come up.
As in a lot of business methods, franchise myths seem to abound. Such myths harm both franchisors and franchisees.
Ultimately, the decision to start an independent business or buy a franchise will depend on your individual goals, skills, and resources.
If you are considering buying a franchise, you should beware of boilerplate disclaimers. They come in many forms. Some are buried in the fine print near the back of a thirty-page franchise agreement. Many are duplicated in a separate document back near the receipt in the FDD.
It was inevitable. The franchise sales engines have been spewing speculative claims about what we might call “pandemic opportunities”. The story is that many restaurants (estimates range from 3% to 50%) will close permanently because of the pandemic and the corresponding recession.
Finding oneself unemployed during 2020’s combined recession and pandemic and watching your savings get rapidly depleted, it is normal to start looking for alternatives to replace your income.
When you launched your business and set up a limited liability company, you probably signed an operating agreement. Your operating agreement is essentially an agreement among the owners about how the business will be operated.
Franchisors require virtually every person who buys a franchise to sign a personal guarantee, even if they plan to operate the franchise through a through a corporation or limited liability company. You should think twice (or more) before signing a personal guarantee.
In evaluating and buying a franchise, there are many things you should consider. Not every franchise is a good investment.
