Buyers > Buyer > Franchise

Buying Into a Franchise

While franchises are a wonderful way for an individual to buy a business model that comes with manuals, support and advice, not all are successful. Make sure you know what to look for when evaluating franchises.

Required Disclosure
The FTC Franchise Rule requires companies to disclose 23 categories of information at least 10 business days before an investor signs a contract or the franchisor accepts money.

Franchises can also be compliant with this rule by issuing a Uniform Franchise Offering Circular/UFOC (developed by the North American Securities Administrator’s Association).  The UFOC is considered a non-negotiable document.

Evaluating Franchises
Investigate thoroughly before signing anything. 
-  Verify the company name and location.  Are they avoiding customer
   complaints by frequently changing their name or location?
-  Interview at least 3 existing franchise owners in the area
-  Check out the local competition
-  Look into the company’s background and litigation history
-  Assess your total costs: initial franchise fees, royalties, renewals,
   transfers, training, assistance, advertising, continuing education,
   products or services
-  Look into restrictions on territory, expansion, selling, transferring or
   terminating
-  Find out if there is training and marketing support