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Safeguards Inherent In The Franchise Business Model

Guest post by: Nigel Mayne

Article Overview: The high failure rate of small businesses within a short period has received much concerned attention in all established markets. The small business franchise model received particular attention in the US aimed at strengthening the chances of the small business franchisee establishing a successful ongoing venture. This is just one of many strong reasons why the new investor should consider the franchise as a safer way to set up in business for themselves.

Safeguards Inherent In The Franchise Business Model

Protecting the rights of the small business owner has been the motivation behind specific legislation in many countries in recent years. The high failure rate of small businesses within a short period, 1 to 5 years in the US, has received much concerned attention. The small business franchise model received particular attention in the US aimed at strengthening the chances of the small business franchisee establishing a successful ongoing venture. The franchisee got more bargaining power, and both the franchisor and the franchisee have rules to follow that guide good behavior and good faith. This is just one of many strong reasons why the new investor should consider the franchise as a safer way to set up in business for themselves.

Protections in the Small Business Franchise Act or SBFA include amongst many other reaffirmations of already existing laws - that fraud within the franchisor and franchisee relationship is actionable. There are other allowances and provisions in the SBFA which safeguard the franchisee`s ongoing and future success. It ensures that the franchisor uses the highest standards of care when handling the franchisee`s money, gives franchisees the right to alternative sources of goods or services and promotes free trade at the expiry of the franchise agreement. Reasonable standards of fair dealing help both parties, the franchisor has a quality partner, the franchisee has more bargaining power and there is a level of trust established in the relationship that helps the business survive through tougher times.

Franchise consultants (franchise brokers) know the red flags in the investment field. It takes the very few promoters that practice business fraud to taint the dream of the franchisee and their family.

That`s where seeking the independent advice of an expert franchising consultant is prudent and invaluable.

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Article Tags: franchise consultants, franchiseeNigel Mayne, small business franchise



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