Franchise businesses such as Wendy’s, McDonald’s and Jack-In-The-Box are booming. The people setting up franchise ideas and businesses know a good thing, and are really promoting this idea. Franchises for just about every conceivable kind of business are being sold in ever increasing numbers.
Some franchises are very good. They treat both the franchisor and the franchisee very well. Others are very one-sided. Still others are almost total rip-offs that trap one into paying ten to fifty times the actual value of the business idea, equipment, or whatever it is they are trying to get you to buy.
Before putting any money into a franchise, you should investigate everything completely. We’ve prepared a list of questions you should be asking, and should get satisfactory answers to before investing.
- Has your attorney studied the franchise contract, discussed it completely with you, and do you both approve it without reservations?
- Does the franchise require you to take any steps which are either illegal or even border on illegal, or are otherwise questionable or unwise in your state, county or city?
- Does the franchise give you an exclusive territory for the length of the franchise period, or can the franchisor sell a second franchise in your territory?
- is the franchisor connected in any way with any other franchise company handling similar products or services?
- If you answered yes to the above questions, what is your protection against the second franchising company?
- Under what circumstances can you end the franchise contract, and at what cost to you?
If you sell your franchise, will you be compensated for your goodwill or will it be lost to you?
- How many years has the firm been offering you the franchise been in operation?