Things to Consider Before Purchasing a Franchise

You should consider the following issues before committing to any purchase:

  • Are you willing to work within the limits and operating structure of the franchise system?
  • Is the product or service to be offered something which you enjoy dealing with?
  • Have you evaluated the market for that product or service?
  • Have you read the franchise disclosure document and resolved any questions which have been raised?
  • Can you arrange for sufficient working capital to offset periods of negative cash flow while the business becomes established?
  • Do you have a business exit strategy and do the franchise agreement terms conflict with it?
  • Have you learned as much as you can from existing and past franchisees about the system under consideration?
  • Have you negotiated the most favorable terms for acquiring or leasing a commercial business premises?
  • Have you sought independent legal and financial advice about the business relationship you are about to enter into?
  • Have you explored the formation of a business entity to help avoid owners’ liability for third party claims against the business?