Doing your homework

It is essential that before you purchase a franchise business from a franchisor you do your homework.

What you can do?

There is a raft of information on franchise businesses in the public arena. You can attend trade shows, review websites, watch existing businesses and most importantly talk to franchisors already in the system.

Read the Disclosure Document and call franchises who are no longer in the system. Find out why they left, problems with the franchisor, find out what assistance the franchisor provides, how many hours did they work, to name just a few questions.

Meet with the franchisor. These meetings are important for you to take notes. If representations are made around profits, confirm them back to the franchisor after the meeting and see their response. This will assist them in not providing you with sales talk.

It is important to document any promises, charges and additional support, to ensure that everyone is on the same page before you sign anything. Ideally, seek advice from an experienced franchise lawyer, such as David Newhouse, before signing anything.

Read more about Franchising:

  1. What is Franchising? The Pros and Cons
  2. Doing Your Homework
  3. Why do you need a Lawyer?
  4. Franchising Agreements & The Code
  5. Breaches, Termination and Disputes

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