Feedback Form
Home Features Mastermind Forums About Advertise Blog Network Contact Be An Author

WHAT YOU NEED TO KNOW Series 2

WHAT YOU NEED TO KNOW Series 2

What You Need To Know - Series 2

The decision to purchase a franchise business can be an exciting and rewarding decision.

There are many franchises, which offer to the buyer, opportunity, independence, growth, challenges, a comfortable income, prestige and security. However, many important questions need to be answered, both of you and by the franchisor before making any commitment to buy.

The franchisor is required by the Federal Trade Commission (FTC) to furnish a potential buyer with a full disclosure document at the first personal meeting.

This disclosure will contain information concerning the material facts about the franchisor. Such things as: the business background of the franchisor; who the officers, directors and key personnel are; the initial fees and cost of getting into the business; various obligations of both the franchisor and franchisee before and after the business is opened; the terms and conditions of the franchise; a copy of the actual franchise agreement; and many other matters that are important to your decision.

Never rely on verbal commitments or promises from a franchisor or franchise broker.

Get everything that may be interpreted as a promise in writing, especially if the promise, projection or commitment is not in the franchise agreement.

It is important to understand that a franchise is a contractual relationship.

What you buy when purchasing a franchise is an agreement. Most people believe the franchise to be the brick and mortar, the concept or idea that is being offered as an investment, the operations of the business or a variety of other things that only describe the franchise. In every franchise sold, a contractual relationship is formed between the franchisor and franchisee, which may be binding for, as many as twenty years or more. The value or worth of the franchise business will be determined by what is contained in the agreement. Too many buyers get caught up in the “dog and pony” show, while all excited by the “horns, whistles and sirens” going off or paying too much attention to the “sizzle” of the business. Don’t overlook the fact that you are buying an agreement and you must be able to live that agreement.

Study the agreement very carefully.

Know and understand what it says. Anything you don’t understand should be explained to you in writing. Don’t rely on verbal interpretation or explanations. If the agreement doesn’t say it and the basic disclosure document don’t address it, don’t be fooled into believing what someone might verbalize to you.

Franchise agreements are usually not negotiable.

The primary reason that franchise agreements are not negotiable is because they need to be uniform. That is to say, everything franchisee is offered the same thing. However, this may vary with an infant (a new franchising company) franchisor. An infant franchisor is one who has just begun offering his franchises and may not have his first franchisee yet. To induce or entice the first franchisee, the franchisor may reduce or even waive the franchise fee, offer lower royalty fees, or make available additional franchise agreements at a bargain price. However, the basic disclosure document should indicate whether or not the agreement is uniform.

Another very important area to be considered is the background of the officers, directors and key personnel of the franchisor.

In most new franchise offerings, the business experience of the franchisor may be limited. You must evaluate and determine whether or not you can be properly trained, supported and benefit from the management of the franchisor. Since as many as 50% to 60% of all new franchise businesses entering the franchise arena do not have company operations or prototypes, you will need to investigate the knowledge, experience, background and credentials of the people behind the franchise business very closely. You will want to know whom you will be involved with for the next twenty years or more.

If the business being offered has existing franchisees, take the time to contact as many of them as you can.

Ask such questions as: are you satisfied with your franchise?; has the business lived up to your expectations?; did you receive the type of training you expected?; are you satisfied with the support you are receiving?; is the business making the kind of income you expected? And can you recommend the business to me? Listen very carefully to the answers that are given to you. Is there still excitement in the voice of the franchisee? What is the franchisee really saying to you?





WHAT YOU NEED TO KNOW Series 2 - To learn more about this author, visit Ken Hollowell's Website.

Like this article? Share it with your friends

Article Feedback
 Article Feedback No article feedback found.
  Leave Your Feedback
article feedback

Article Feedback
Dianne Crampton

Dianne Crampton is an executive leadership coach, team culture consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here.

Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009.  Her new book TIGERS Among Us: 5 Winning Business Team Cultures And Why, Three Creeks Publishing will release in March 2010.  To receive publishing discounts, subscribe to the free TigerTracks Newsletter here.

- Visit Dianne Crampton's Website

Staging Diva
Debra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website


To learn more about the Evan Elite Author Program please contact us.

About The Author


Ken Hollowell
(Visit Ken's Website) – Ken M. Hollowell, founder of both Prfran Consultants, Inc. and National Franchise Services, Inc. and is a leader in the field of franchise development since 1980. Mr. Hollowell has lectured before many business organizations, Universities and Colleges on the subject of franchising and hosted a radio talk show of radio for years. He conducts numerous seminars annually on franchise development and investing in a franchise business throughout the United States. He is regularly requested by the Small Business Administration in Washington, D.C., S.C.O.R.E., Learning Annex and the International Franchise Association to speak on franchising. Mr. Hollowell's well-rounded experience and practical knowledge in both development and marketing have led him to be one of the most sought after franchise consultants in America. Mr. Hollowell has written many articles on both developing a franchise network and buying a franchise. Mr. Hollowell sits on no less than a dozen boards of directors.

Ken Hollowell is a Platinum author on EvanCarmichael.com
About The Author

View Author Blog
View Author Blog

View Author Video
View Author Video

Free Downloads


Ken Hollowell's

Complete
List Of
Franchises
Articles

Name
Email
If you enjoyed this article, get Ken Hollowell's Complete List of Franchises Articles For FREE!

More Ken Hollowell
The Best Kept Secret In Business Funding
How to Start a Franchise System and Network
ARE FRANCHISES CHANGING WITH THE TIMES
What You Need To Know About Franchising Your Business or Concept
THE HISTORY OF FRANCHISING
Newsworthy Trends in Franchising
Franchisors Must Document Everything
The Royalty Fees of a Franchise
Buying A Restaurant Franchise
WHAT YOU NEED TO KNOW ABOUT BUYING A FRANCHISE
Free Downloads


 
 
 


Evan Elite Authors
David Barr  
John Brennan  
George Ludwig  
Evan Elite Authors

Become An Author
Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details.
Become An Author

Evan's Latest Video
Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media
Evan's Latest Video

Business Opportunities
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"

How to Start An Online Business

Click Here To Learn More
Business Opportunities



Evan's Newsletter
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
Name:
Email:
Evan`s Newsletter

Free Downloads
Disappearing Leader Icon Disappearing Leader
Integrity Guide Icon Integrity Guide
Referral Networking Solution Icon Referral Networking Solution
Franchise & Distribution Icon Franchise & Distribution
Networking Difference In A Decade Icon Networking Difference In A Decade
Free Downloads - Complete List

Entrepreneur Tools and Guides
Top 50 Debt Blogs
Top 50 Debt Blogs
Learn To Get Out Of Debt
 
The Top 10 Guy Kawasaki Posts - Best Posts for Entrepreneurs
The Top 10 Guy Kawasaki Posts
Best Posts for Entrepreneurs
 
Entrepreneur Tools and Guides

SEO For Africa
SEO For Africa
Samson Adeniyi Ibadan, Oyo State, Nigeria,
Samson Adeniyi
Ibadan, Oyo State, Nigeria
SEO For Africa

If I Were A Startup...
Robert Iachetta, $372k to $921k in 2 years
Robert Iachetta
$372k to $921k in 2 years
John Zarei and Shaan Parekh , $516k to $1.5 Mil in 2 years
John Zarei and Shaan Parekh
$516k to $1.5 Mil in 2 years
If I Were A Startup... - Complete List

Famous Entrepreneurs
Henry Ford, Ford Motor
Henry Ford
Ford Motor
Jenny Craig, Jenny Craig
Jenny Craig
Jenny Craig
Famous Entrepreneurs - Complete List

Entrepreneur Advice
Jeffrey Gitomer, The Sales Bible
Jeffrey Gitomer
The Sales Bible
Paul Kedrosky, Venture Capitalist
Paul Kedrosky
Venture Capitalist
Entrepreneur Advice - Complete List

Popular Articles
(Premium Authors)

     Are You Ready to ReEnter The Workforce Back to Work Strategies that Work
By Kirsten Ross
     I learned a Life Lesson from My Car
By Kirsten Ross
     Managing a Telecommuter Successfully
By Kirsten Ross

Have A Suggestion?
Toronto Salsa Classes / Toronto Salsa Lessons Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
Have A Suggestion?

More Evan Carmichael
More Information