Franchising Law Attorneys
Ten Steps to Success in Franchising
- Conduct an independent investigation of the target market in your area. Will this franchise be successful locally? Who are the competitors? How much demand exists?
- Choose the right franchise for you. Brainstorm a list of the characteristics that you would want in a franchise that you will operate. Some franchises are death traps for one with entrepreneurial ambitions due to the rigid structure and procedural restrictions inherent in franchise arrangements.
- Interview multiple franchisees, and not merely the ones the franchisor introduces you to. Franchisees who:
- Are in different locations;
- Have one franchise;
- Have multiple franchises;
- Have been in business a long time;
- Are still new;
- Are no longer franchisees;
- Are successful; and
- Are not doing so well.
- Make sure you have enough working capital to last many months.
- Financing, loan requests, and financial statements are important. If this is not your forte, make sure to ask for a referral to a good accountant.
- Make sure to visit the franchisor’s headquarters and meet franchise personnel other than your sales representative before signing the contract. Knowing and evaluating the field manager assigned to your territory is particularly important. You will need to work cooperatively with this person for some time to come, and will want to know if this person is someone experienced and with whom you can get along.
- Study the franchisor’s national and regional marketing strategies. Part of your fees goes toward advertising and it is extremely useful to estimate how effective this advertising will be for your local market.
- Verify oral representations: ask politely if you can tape record meetings and take copious notes.
- Read and understand all terms in the Franchise Agreement.
- Ask your attorney to provide a standardized review of the Franchise Agreement and Disclosure Document. This should be a flat-fee project that concludes with a review conference and written report.
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