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What You Should Know About Small Business Franchise Opportunities |
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Written by Myles Krueger
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Wednesday, 24 September 2008 03:48 |
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A healthy and growing franchise (no matter in what area) increases the chance for success if it has a well-known name and brand. The more widely recognized name, the more likely it is that customers will be drawn to it. And that is positive for you as a new franchisee.
by MylesKrueger
A healthy and growing franchise (no matter in what area) increases the chance for success if it has a well-known name and brand. The more widely recognized name, the more likely it is that customers will be drawn to it. And that is positive for you as a new franchisee.
You also have to keep in mind that there is no guarantee that just because you purchased the franchise that it will be a success. By buying a franchise, it may reduce your investment risk because you now are associated with an established company but there are many obligations.
In exchange for the right to use the franchisor's name and assistance, you will have to pay some fees. These costs will be different in every situation. Fees you could incur would be for equipment, rental space, inventory, operating licenses, insurance, advertising, etc.
Before you select a franchise system, it is a good idea to think about how much money you have to invest, your abilities, and your goals. Then think about the competition, the franchisor's background, and the level of support you will be receiving, because all of these can cost you in the long run.
An accountant can help you understand the company's financial statements and a lawyer can help you understand your many obligations ahead (which will be many and necessary) under the franchise contract. They will help you review the franchisor's financial statements, audit report and other important company statements.
It is a good idea to go out on your own and visit franchise outlets in your area and talk to the owners about their experience and if they would recommend doing it again. Check with your state employment agency for information on franchise and business opportunities.
Within the franchisor's disclosure document, many important items have to be disclosed and they are: the franchisor's background, the business background, if there has been any bankruptcy, and all litigation history. This must be given to you fourteen days before you sign any papers.
The most important section, however, is the initial and ongoing costs which includes: royalty payments, employee salaries and benefits, health insurance, training and legal fees, product and service costs, waste removal fees, advertising payments, business and operating licenses.
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