A good bit
of research is required before making any smart business decision.
Before making the leap into a franchise scheme, make sure you
investigate the franchisor thoroughly before you sign
on the dotted line.
to reading the company's disclosure document and speaking with
current and former franchisees, you should speak with the following:
& accountant can help you through the franchise maze
Investing in a franchise is costly. An accountant can help you
understand the company's financial statements, develop a business
plan, and assess any earnings projections and the assumptions
upon which they are based. An accountant can help you pick a
franchise system that is best suited to your investment resources
and your goals.
contracts are usually long and complex. A contract problem that
arises after you have signed the contract may be impossible
or very expensive to fix. A lawyer will help you to understand
your obligations under the contract, so you will not be surprised
later. Choose a lawyer who is experienced in franchise matters.
It is best to rely upon your own lawyer or accountant, rather
than those of the franchisor.
can I find a lawyer who specializes in franchising?
You can start by checking with your state bar association. Many
state bar associations allow member lawyers to identify the
areas of practice in which they specialize, and franchise or
distribution law is a recognized specialty in an increasing
number of states.
Bar Association also publishes a Membership Directory of the
Forum Committee on Franchising. The Directory, which is organized
by state and city, lists the names, addresses and telephone
numbers of attorneys who are members of the Forum Committee.
To obtain a copy of the directory, an individual must be a member,
it is not for sale to the public. Individuals may contact the
ABA leadership for referrals or may be faxed a partial listing.
For more information, check out the ABA page on the legal side of franchising requirements.
and other financial institutions
These organizations may provide an unbiased view of the franchise
opportunity you are considering. Your banker should be able
to get a Dun and Bradstreet report or similar reports on the
Business Bureau franchise tips
with the local Better
Business Bureau (BBB) in the cities where the franchisor
has its headquarters. Ask if any consumers have complained about
the company's products, services, or personnel.
departments regulating franchises
Several states regulate the sale of franchises. Check with your
state Division of Securities or Office of Attorney General for more information about your rights
as a franchise owner in your state.
Federal Trade Commission (FTC)
The FTC publishes other information that may be of interest to you, including business guides like Getting Business Credit and Buying by Phone. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them.
To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357.. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer
Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Source: Federal Trade Commission