We all might be out of school, but business opportunities do require doing your homework. You do not want to make this sort of decision without having done homework, your due diligence, in accessing the opportunity.
When you are 14 days from completing the purchase of a franchise business concept, the franchisor is required (by federal law) to provide you with disclosure documents about the franchise.
WHAT IS IN THE DISCLOSURE DOCUMENTS
Some of the details that will be in these franchise disclosure documents will be: franchisor revenue, number of units sold, number of units resold, and whether the franchisor is or has been involved in any significant lawsuits.
You will also receive names and phone numbers of all current and past franchisees.
REVIEWING THE DOCUMENTS
These documents could be several hundred pages long, and should be overviewed by your accountant and lawyer, as well as those involved in buying the franchise.
Now, if possible, try and get a copy of the franchisor’s disclosure documents as soon as you can. This will give you the chance to do some digging before you meet with the franchise sales team. You might be able to spot some issues before you “fall in love” with the business.
WHAT TO DO WITH THE INFORMATION
You are looking for red flags in the disclosure documents. A high number of resells, franchisor vs. franchisee lawsuits, or other items that just give you a bad gut feel. Look over these documents with your lawyer and accountant as well.
You are looking for red flags in the disclosure documents. A high number of resells, franchisor vs. franchisee lawsuits, or other items that just give you a bad gut feel. Look over these documents with your lawyer and accountant as well.
Last but not least, make sure to contact FranNet. I am a highly successful former franchise owner and seasoned consultant with experience in helping people reach their dream of business ownership. My goal is to get to know you, and help you know what you are getting into. For example, if you are looking to get into a semi-absentee business ownership situation (where you are only working 15-20 hours a week on your business), I can steer you clear if the franchise your are considering will require much more than that.
I invite you to attend my upcoming FREE workshop, "Is Franchising Right For You?" This event is being held THIS TUESDAY (February 24, 2015) in Clarkston, MI. We'll be covering the following topics in this seminar: General discussion of the reasons that compel individuals to start their own business in the first place.
IS FRANCHISING RIGHT FOR YOU?
- A comparison of the pros and cons of starting a business from scratch, buying an existing business or starting a franchise.
- How franchising can provide a desirable alternative to traditional employment by reducing the risk of ownership to an acceptable level through proven business systems, comprehensive training and ongoing support.
- Basic information on franchising, including the range of industry categories, entry and long-term strategies, investment levels and fees.
- The legal regulations governing franchising that protect the buyer.
- A strategic approach to defining your personal business model, quantifying your returns and safely researching and selecting the business opportunity that’s right for you.
- Growth trends and choices in franchising that offer stability and success in weak and strong economies.
- A brief overview of FranNet’s no-fee, no-obligation consulting service is also provided.
To register, or for more information, please visit michiganfranchiseforum.com/registration.php or contact me directly at 810-423-3956 or lbelford@frannet.com.
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