Buying a Franchise

Buying a franchise is normally the best option when comparing a franchise to starting your own business. Franchising has grown in popularity and the franchise opportunities that are available today range from starting a car wash franchise to a computer repair service.

Considering purchasing a franchise should not be taken lightly as the start up fees of a franchise can be high.

The cost of the franchise will depend on a number of factors such as the potential income, brand value, presence etc.

The most important aspects that need to be considered when buying or purchasing a franchise are:

The Franchise Agreement:

The franchise agreement is a contract between you and the franchise. It is vital that you understand the terms and conditions of the franchise agreement. It is highly advised that you take up legal advice when reading over a franchise agreement as a solicitor will assist you in understanding the regulations and terms of service.

Areas that require attention are:

Fees: obliviously the fees that you will have to pay need to be considered. The fees and royalties depend on the type of franchise, the initial amount and the percentage of profits. Questions that you should ask are: What percentage of sales revenue will you have to pay? How are the fees determined, and Will you have to pay other costs?

Support: New franchise owners will lack experience and so they will require support and help. Most franchises offer training and support to ensure that franchises meet expectations and succeed. Possible questions that need to be asked are: Is there a support contact line, how much help will you get starting the business? What continuing support will you get?

Limitations: Deciding to buy a franchise means that your creativity and control of the business is limited. The franchise agreement will stipulate restrictions on your franchise. New franchise owners will require support and resources. You will need to ask questions such as what are you allowed to change or do in the business and what restrictions apply.

Selling: Franchising is not the right opportunity for everyone and if you start a franchise and feel that you cannot cope anymore you might want to consider selling the franchise. Some franchise agreements will not allow you to sell the franchise and so this will have to be asked.

Competition: The franchise company should want to promote fair businesses practises and competition, but it is advised to query if you have exclusive rights to sell in a particular area and can other franchises of the same brand open next door? Also ask what area does your franchise cover?

Deciding to purchase a franchise is the right step if you want to start earning money and be able to own a franchise. Always get advice on the franchise agreement especially legal advice so that you won’t get caught out by the fine print. Buying a franchise should be a learning curve as well as a step towards a brighter future.