The Pros and Cons of Buying a Franchise

Many people dream of owning their own business someday. For many, the opportunity to own a franchise is a great way to make that dream come true.  Before making a big purchase, potential owners should understand the pros and cons of buying a franchise.  Careful consideration is required before you make a commitment.

The Franchise Has a Proven Business Model

The most difficult part of starting your own business is setting up the business itself.  A franchise has already tackled all of the hard work, allowing you to simply plug into the proven business model that was already developed. You won’t need to reinvent the wheel, so you can hit the ground running.

Assistance with Management and Operations

One of the best benefits of buying a franchise is the help you receive with management and operations functions.  You will receive training in the operation procedures of the company, and will be provided with documentation that is ready to use.  You will be able to step in and manage the company from the first day, so you can concentrate your efforts on the success of your business.

Advertising and Marketing is Included

Franchises are usually regional or national chains.  They have an established recognizable brand, and provide advertising and marketing plans that are successful.  The marketing plan provided through a franchise is almost always much better than anything you could budget for on your own.  The parent company wants the franchises to succeed and helps them with reach their sales goals.

Excessive Franchise Royalties and Fees

Owning a franchise often requires you to pay fees and royalties to the company.  These costs should be detailed in the contract.  Do not sign the contract until you thoroughly read and understand it.  Make sure you know about any hidden expenses that could cause you to reduce your profit margin.  It is also important to note that the purchase price of a franchise can be very high.  However, some companies offer loan options that are very beneficial.

Lack of Independence in Entrepreneurship

While you will own and operate your own business, you will be doing so under the control of the franchise company.  Franchise owners are required to abide by the rules and policies that are in place.  You may not feel as free as you would if you started an independent enterprise, your own business.

Governing Law

Arizona does not have state statutes governing franchising.  Franchisors are directed to the Federal Trade Commission’s Federal Franchise Rule.

Before you purchase a franchise, have the contract reviewed by an experienced attorney.  Call the skilled legal team at Udall Shumway PLC to schedule a consultation today.

 

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Buying a Franchise, or any other litigation matter, please feel free to contact Stockton D. Banfield at 480.461.5356, log on to udallshumway.com, or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.