What You Need to Know Before Purchasing a Franchise

Entrepreneurs: Here’s a look, from a legal perspective, at what to consider if you think a franchise might be a way to start a business.

Your Lawyer

  1. Why a consider purchasing a franchise
    1. Proven business model
    2. Market recognition
    3. Advertising strength
    4. Might be easier to finance

  1. A “Franchise” is an oral or written agreement, either express or implied, which provides all of the following[1]:
    1. Grants the right to distribute goods or provide services under a marketing plan prescribed or suggested in substantial part by the franchisor.
    2. Requires payment of a franchise fee to a franchisor or its Affiliate.
    3. Allows the franchise business to be substantially associated with a trademark, service mark, trade name, logotype, advertisement, or other commercial symbol of or designating the franchisor or its affiliate.

  • What a franchise is not
    1. A guaranty of success
    2. A job
    3. A recipe (but it might include recipes)
  1. Due diligence on Franchisor
    1. Check their financial capability
    2. Check their reputation
      1. Ask other current franchisees
      2. Ask business rating services like Better Business Bureau and/or Iowa Business and Industry
  • Ask FORMER franchisees

View original post 199 more words

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Basic HTML is allowed. Your email address will not be published.

Subscribe to this comment feed via RSS