Think before you buy a franchise.

Susan-Says®:
Think before you buy a franchise.

By: Susan Wilson Solovic, CEO of SBTV®.com


During the last 40 years, franchising has become a popular business
expansion method. Currently, there are 1,500 franchise companies operating in
the United States with 320,000 retail outlets, according to the International
Franchise Association. There is almost no product or service that can’t be
purchased through a franchise operation today.

The popularity of franchising can be explained in part by the upward trend
in business ownership. As corporate America downsized, thousands of workers
looked to purchase a franchise as a means of getting into business rather than
starting from scratch. Because a franchise program typically gives you a blue
print for building a business, the risk of failure is reduced, as compared with
business start-ups which fail about 50 percent of the time.


When you purchase a franchise, you benefit from the experience and
expertise of the franchisor. The franchisor has a vested interest in your success.
As a result, most offer training and assistance with business set-up, the hiring of
employees, personnel training, site selection and lease. Most franchisors provide
standardized operating systems along with a financial and accounting program.
Additionally, franchisees profit from national advertising and collective buying
power. If initial capital is a problem, many franchisors offer some type of initial
financing packages.


Before you purchase a franchise, keep in mind, not all franchises are
created equally. It’s imperative you do your homework and ask the right
questions. For your protection the FTC requires franchisors to supply a full
disclosure of the information a prospective franchisee needs in order to make a
educated decision about whether or not to invest. This is called the Uniform
Franchise Offering Circular. It includes such things as the franchisor’s business
background, the financial history of the franchise, termination and renewal
statistics, product purchase requirements and training programs offered. You
must receive this document at the time of the first personal contact where the sale
Notwithstanding any provision in any documents available here, you are permitted to download an entire, unchanged copy
(including any copyright notice and author attribution) to a computer and make a print copy of internal use.

This material is intended to provide a general overview and does not purport to provide all specific requirements
for any person. MasterCard provides this material AS IS for the convenience of its members and cardholders.

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of a franchise is discussed and at least 10 business days prior to the signing of any
contract or the payment of any monies. This is referred to as a “cooling off”
period.


Don’t make any quick decisions. Take time to review this information
carefully. Make sure you clearly understand exactly what investment is required
and what kind of additional fees might be involved.

Evaluate the strength of the franchisor by talking with other franchisees.
The franchisor is required to provide you with their contact information. Ask
existing franchisees detailed questions and compare their responses with the
information provided by the franchisor.


Take time to consult with a franchise attorney and CPA. These
professionals can help you decipher the legal information and financial statements
provided in the disclosure document.

Finally, keep in mind buying a franchise is not for everyone. When you
buy a franchise you are your own boss only to a point. A successful franchisor
must maintain control over franchisee operations to ensure uniformity and quality
control. For some people, the thought of giving up even a little control is out of
the questions. So if you have a strong entrepreneurial spirit, then becoming a
franchisee probably isn’t your best bet.

More information on franchise opportunities is offered through the International
Franchise Association (IFA) for a minimal

Notwithstanding any provision in any documents available here, you are permitted to download an entire, unchanged copy
(including any copyright notice and author attribution) to a computer and make a print copy of internal use.

This material is intended to provide a general overview and does not purport to provide all specific requirements
for any person. MasterCard provides this material AS IS for the convenience of its members and cardholders.

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