Buying a franchise

A franchise is one way to avoid many of the risks and headaches associated with starting a new business. When you buy a franchise, you are buying the right to use the franchisor's name, product, and management approach. A franchise already has its infrastructure in place as well as a promotional strategy. Name recognition may be well-established and you have a good idea of what you are getting.

Before you buy a franchise, proceed cautiously and do your homework. You might want to take a test to see if you will make a good franchise owner. Make sure the company you are considering fits your personal interests and needs. Ask a lot of questions. Visit a franchise unit and spend some time there. Talk to the owner and customers. Imagine working there for years.

When you find a franchise you like, contact the franchisor to request information. Generally, you will be asked to provide some basic information, including personal financial data. If this initial paperwork is satisfactory, you should be invited to visit the home office where you will usually receive a tour, sales presentation, and a Uniform Offering Circular (UFOC) with information about the company. This information should help in your decision to negotiate a franchise purchase.

Study the UFOC carefully. It is good to have professional help in analyzing the financial statements, litigation history, and other background information. Examine the franchise agreement carefully with your lawyer. Talk to as many franchisees and visit as many units as possible. Proceed with the deal only when you are fully satisfied that this is the business for you.

Other sites of interest:

• A Consumer Guide to Buying a Franchise
• Franchise Feasibility Evaluation Checklist
• Be The Boss
• The Franchise Registry
• SBA Franchise Workshop
• Most Frequently Asked Questions About Franchising
• Franchise Direct
• Virtual Franchise Opportunities Mall
• Bison: the Franchise Network
• FranInfo
  
  
  

This document was prepared by the San Joaquin Delta College Small Business Development Center. Send comments to: Gillian Murphy

Acknowledgements, disclaimers, etc.