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. 

Find out how many franchises have been sold and how long the business has been going.  

Find out about the franchisors- their experience, track record.  

Visit 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 will buy? 

Check that the franchise name has been registered as a trade mark, otherwise franchise you buy could be worthless.  

Assess the 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:

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?

Review other terns in the agreement- are there any you are not happy with? 

Assess the price to enter:

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.

If we can assist further, please email TotalAccounting as follows:

BACK TO KNOWLEDGE AND INFORMATION CENTRE HOME PAGE