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Issues to consider when choosing a franchise

| May 21, 2020 | Franchise Law

Buying a franchise involves certain risks. It is not as chancy as a start-up because hopefully there is name and brand recognition as well as business guidance and an established product or service. But there are still specific business issues to consider before investing.

Research questions to answer early on

The prospective franchisee will need to look at themselves to see if they are ready to take on the challenge. Still, the Federal Trade Commission recommends researching these specific areas before getting too deeply invested in the buying process. These include:

  • Demand: Is there a demand in your area for the products and services offered by the franchisors? Is there a strong national reputation or buzz if there are no outlets in the area? Or will the franchisee have to grow their customer base? Is the product trendy or traditional?
  • Competition: The buyer should consider competition (including from other franchises) at the local, regional and national levels. Is the competition’s brand well established in the community? Does the company sell your products online?
  • Name recognition: Consider how long a company has been in business and the reputation of the products and services. It is also wise to check to see if there is intellectual property protection.
  • Reputation: Does the company have a strong reputation with its franchise partners, or are there numerous complaints? Check with the Better Business Bureau along with other online resources.
  • Training and support: Is the company providing all the necessary tools to give the investment every chance for success?

One part of the equation

Once the potential franchisee considers all the above, it is important to start working with an attorney who handles the review of franchise agreements before signing any contract or paying any fees. The attorneys at Lanard and Associates can help protect clients from unfair contracts or business decisions they later regret.