Buying a Franchise
May 25th, 2006 by blogger
Buying a franchise is not for everyone. This guide will help you evaluate whether buying a franchise is right for you. It will help you understand your obligations as a franchise owner. Many people dream of owning and running their own business but are often let down by the reality of doing so.
By purchasing a franchise, you often can sell goods and services that have instant name recognition and can obtain training and ongoing support to help you succeed. But be cautious. Like any investment, purchasing a franchise is not a guarantee of success.
A franchise typically enables you, the investor or “franchisee,” to operate a business. By paying a franchise fee, which may cost several thousand pounds, you are given a format or system developed by the company (”franchisor”), the right to use the franchisor’s name for a limited time, and assistance.
While buying a franchise may reduce your investment risk by enabling you to associate with an established company, it can be costly. You also may be required to relinquish significant control over your business, while taking on contractual obligations with the franchisor.
Outlined below are some of the main points you need to consider before buying a franchise:
Franchise fee: Your initial franchise fee, which may be non-refundable, may cost several thousand to several hundred thousand pounds.
Royalty payments: You may have to pay the franchisor royalties based on a percentage of your weekly or monthly gross income. You often must pay royalties even if your outlet has not earned significant income during that time. In addition, royalties usually are paid for the right to use the franchisor’s name.
Advertising fees: You may have to pay into an advertising fund. Some portion of the advertising fees may go for national advertising or to attract new franchise owners, but not necessarily to target your particular outlet.
Controls: To ensure uniformity, franchisors typically control how franchisees conduct business. These controls may significantly restrict your ability to exercise your own business judgment.
Terminations and Renewal: You can lose the right to your franchise if you breach the franchise contract. In addition, the franchise contract is for a limited time; there is no guarantee that you will be able to renew it. A franchisor can end your franchise agreement if, for example, you fail to pay royalties or abide by performance standards and sales restrictions. If your franchise is terminated, you may lose your investment. Franchise agreements typically run for 15 to 20 years. After that time, the franchisor may decline to renew your contract.
Before investing in a particular franchise system, carefully consider how much money you have to invest, your abilities, and your goals.
You may freely reprint this article provided the author’s biography remains intact:
About the Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.
-
Top Market Share Hotel Companies 2001 Survey
FranchiseHelp has completed The Top Market Share Hotel Companies 2001 Survey Report. Top companies are as cited in Nation s Restaurant News Top 100 Chain and Company Rankings (June 26, 2000 issue) and Second 100 Chain and Company Rankings (July 24, 2000 issue). The Top Market Share Hotel
MacDonald’s
Are you interested in becoming a franchisee? Do you have a special interest in a franchise brand? Interested in investment research? Do you live outside the United States and want to learn more about a favorite franchise concept? You ca
Checkers
Are you interested in becoming a franchisee? Do you have a special interest in a franchise brand? Interested in investment research? Do you live outside the United States and want to learn more about a favorite franchise concept? You ca
Drama Kids
This report is the Uniform Franchise Offering Circular (Ufoc) for Drama Kids What’s a Ufoc? If you appear to be a good candidate for a franchise, the franchisor will send you a Ufoc, or “Uniform Franchise Offering Circular.” This document is required of franchisors by the Federal Trade
Health Clubs of America
This report is the Uniform Franchise Offering Circular (Ufoc) for Health Clubs of America What’s a Ufoc? If you appear to be a good candidate for a franchise, the franchisor will send you a Ufoc, or “Uniform Franchise Offering Circular.” This document is required of franchisors by the
Tags: Franchise Articles