QUESTIONS TO ANSWER BEFORE
YOU BUY A FRANCHISE
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Franchise businesses such as
McDonald's, Burger King, and Kall
Kwik Printing, are booming.
The people setting up
franchise ideas and businesses know a good
thing, and are really promoting
this idea.
Franchises for just about
every conceivable kind of business are
being sold in ever increasing
numbers.
Some franchises are very
good. They treat both the franchiser
and the franchisee very well.
Others are very one-sided.
Others are almost total rip-offs, that trap one into paying ten
to fifty times the actual
value of the business idea, equipment,
or whatever it is they are
trying to get you to buy.
Before putting any money
into a franchise, you should
investigate everything completely.
We've prepared a list of
questions you should be asking, and
should get satisfactory answers to
before investing.
1. Has your lawyer studied the franchise
contract, discussed it
completely with you, and do you both
approve it without
reservations?
2. Does the franchise require you to take any
steps which are
either illegal or even border on
illegal, or are otherwise
questionable or unwise in your county or
city?
3. Does the franchise give you an exclusive
territory for the
length of the franchise period, or
can the franchiser sell a
second or third franchise in your
territory?
4. Is this franchiser connected in any way with
any other
franchise company handling similar
products or services?
5. If you answered yes to the above question,
what is your
protection against the second
franchising company?
6. Under what circumstances can you end the
franchise contract,
and at what cost to you?
7. If you sell your franchise, will you be
compensated for your
goodwill or will it be lost to you?
8. How many years has the firm offering you the
franchise been
in operation?
9. Does the company offering you this franchise
have a
reputation for honesty and fair
dealing among its franchisees?
10. Has the franchiser shown
you any certified figures
indicating exact net profits of one or
more of its members, and
have you personally checked the
figures with these people?
11. Will the franchiser
assist you with:
a) A management training
programme; b) An employee training
programme; c) A public relations and
advertising programme; d)
Capital; e) Credit; f)
Merchandising ideas.
12. If needed, will the
franchiser assist you in finding a
suitable location?
13. Is the franchising firm
adequately financed so that it can
carry out its stated plans?
14. Does the franchiser have
experienced management training?
15. Exactly what can the franchiser
do for you that you cannot
do for yourself?
16. Has the franchiser
investigated you carefully enough to
assure itself that you can
successfully operate at a profit to
both of you.
17. Does your area have a
law regulating the sale of franchises,
and has the franchiser complied
with that law to your
satisfaction?
18. How much equity capital
will you need to purchase the
franchise and operate it until your
income equals your expenses?
If you can get the answers to each of these
questions, and
those answers satisfy you, then
you're probably thinking of
buying a pretty good franchise
idea.
However, if you're in doubt
about any of these points, be sure
to check it out and know the
answers for certain before you
invest or sign anything.
Buying a franchise can give
you a measure of security, and in
some cases, sure fire profits.
Business surveys show that
fewer than 20 percent of all new
franchised businesses fail.
This is in comparison to a
60 to 80 percent failure rate for all
new businesses started in this
country each year.
Information regarding
specific franchising ideas can be found in
the franchising directories,
which are generally available at
the local library. Often there
will be a notice posted in
franchise outlets themselves.
If you can afford the entry
into this business, statistics are
on your side. You are now
armed with some caution and stop and
go signs!
ceivable kind of business are
being sold in ever increasing
numbers.
