Franchising is one of the worth investments today. If you are considering a franchise then, chances are there are many things that you want to evaluate. As posted on APnews, not all franchising firms are the same, with some even offering alternatives. Given these circumstances, posted below are some of the key factors that you should consider first before you sign a franchise agreement.
Due diligence is about evaluating your franchise investment before you pay a franchise fee, and before you sign a franchise agreement. If you are about to make an intensive multi-year commitment to another business, you must make a thorough evaluation of the franchisor and the potential franchise opportunity. Many franchisees assume that if a franchise system consists of several elements, a wonderful product, and good looking stores worth the franchise opportunity. However, ‘profitability’ is not guaranteed, and not all franchises are the same. Of course, all of this assumes that you have first found the perfect business for you and your goals.
A common myth among franchisors is that franchise agreement is not negotiable. In reality, this is incorrect. The vast majority of franchise agreements are negotiable, and franchisors are legally permitted to modify and change their franchise agreements if the change is due to a request from a franchisee seeking to improve its franchise rights. Don’t “look” at what is negotiable, but there are many reasonable franchisors in the industry and if you are also reasonable, you may be able to negotiate some specific changes to the franchise agreement that “enhance and clarify” your legal rights as a franchisee.
Existing franchisees – people who have already purchased, established, and are working with the franchise you want to buy – represent one of your most important assets. These franchisees may reflect your potential, and before you sign a franchise agreement, it is in your best interest to contact them and discuss their experience with the franchise program. You should ask questions about the franchisor’s support, the sustainability of the business, the franchisor’s promotional initiatives, approximate start-up costs, and overall satisfaction with the investment decision.