Franchises

THE BENEFITS

• Reduction of risk
• Turnkey operation
• Standardized products and systems
• Standardized financial and accounting systems
• Collective buying power
• Supervision and consulting readily available
• National and local advertising programs
• Point-of-sale advertising
• Uniform packaging
• Ongoing research and development
• Financial assistance
• Site selection guidance
• Operations manual provided
• Sales and marketing assistance

THE DOWNSIDE

• Loss of control
• A binding contract
• The franchisor's problems are also your problems

CHECKLIST

• thoroughly review the financial disclosure and other documents relating to the franchisor and the business


• understand the franchise fee that you will have to pay and the payment schedule


• review state law requirements, if any, regarding franchise advertising


• familiarize yourself with federal and any state law regulations governing the franchise relationship


• learn about your competition and the legal issues dealing with the handling of competitive activities.


• your right to have the only franchise within a certain territory


• its term, termination and renewal


• any limitations on your right to sell the franchise


• costs and procedures for terminating the agreement


• any restrictions on your right to operate a competing business when the franchise agreement terminates


• your liability, if any, if the franchise does not make its projected profits.