BUYING A FRANCHISE – WHAT YOU SHOULD CONSIDER
Use an advisor e.g. bank
manager, accountant to examine past forecasts and past financial accounts,
solicitor to go through contract.
out how many franchises have been sold and how long the business has been going.
out about the franchisors- their experience, track record.
and talk to existing franchisees.
Assess the industry of
the franchise and its growth prospects.
Carry out market research to assess the prospects?
Is there a customer base? Who
Check that the
franchise name has been registered as a trade mark, otherwise franchise you buy
could be worthless.
arrangements for purchasing equipment and stock.
Will you be tied in to purchasing direct from the franchisor?
What will be the prices charged in comparison to other suppliers?
Check if you have
exclusive arrangement to sell in the area.
Check what the
franchisor will provide:
|Advertising and marketing
|Help when unwell|
Assess what will be
your responsibilities under the franchise- compliance with franchisor rules.
Check how long the
franchise agreement term will be
. What happens at the end of the term- will you have right of renewal?
What happens if either the franchisor or yourself want to break the agreement
prior to the end of the term?
. What happens at the end of the term- will you have right of renewal? What happens if either the franchisor or yourself want to break the agreement prior to the end of the term?
other terns in the agreement- are there any you are not happy with?
Assess the price to
Can you afford it?
Check your own financial position.
Are you able to get finance and repay loans?
Assess whether you
are suited to the franchise form of business
Assess whether you
have the skills and experience, or are willing to be trained, for the industry.
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