Frequently Asked Questions About Franchising


If you’re thinking of investing in a franchise, it’s important to do your due diligence. It’s a major investment and you don’t want to make a decision that will have significant personal and financial impact for you and your family . Franchising laws are very complex and you’ll need a lawyer to help you understand the details as well. Here are a few of the more frequently asked questions about franchising.


What is franchising?

It’s a contract that binds partners into a business model that has been crfeated by the franchisor or owner of the business. The franchisee is an independent operator who is subject to the rules of the contract or franchise. 


How safe is my money?

Like any business, you are always at risk of losing your investment. If you decide that franchising is not right for you, often you can sell the franchise to recoup some of it. The best way to prevent a situation like this from happening is to research any opportunity thoroughly, work with an experienced franchise consultant and retain a lawyer before you sign anything. 


Is the opportunity legitimate?

You can check the opportunity out on as well as check out any earnings claims by searching for financial disclosure documents online. Also, ask for a list of the last five to ten people who have purchased franchises so you can talk to them and find out what their experience with the franchise has been like.


How much money do I need to invest?

Each franchise is different in terms of your initial investment, but you should also learn about what your ongoing costs will be. For example products, marketing, royalties and more. 


How much will I earn?

You should be able to find out what the average franchise investors are earning via their disclosure forms. You need to make sure that the franchise is capable of producing the kind of income you need to earn for it to help you reach your financial goals.


What is the timetable from start to the grand opening?

It will depend on the franchise that you purchase. Do you have a space in mind? Do you need to buy land? Do you need to have the business built? Your franchisor usually helps with these aspects and will be happy to let you know how long it takes. You can also ask other franchisors how long it took them.


How long will it take me to profit?

Each franchise has stats that will back up how long it will take to become profitable. Usually, a well-known franchise becomes profitable faster than a completely unknown business. 


Do I need to hire a lawyer?

Yes. Everyone who is considering a franchise opportunity should hire a lawyer who is experienced in franchise law. This will help protect you from making any costly mistakes.


Is buying a franchise safe?

It’s safe if you go through the right process to properly research and identify the best  franchis opportunites for you to buy into. Due diligence is a must. Working with a qualified franchise consultant shortens the process of matching you to the right franchise for you. 


What fees are involved?

Each franchise has different fees involved such as royalty payments, product purchases, and more. It’s in your best interest to understand everything you’re required to purchase from the franchisor. 


Can I get financing?

If you have good credit, plus the liquid cash required, you can usually get financing from a bank or from the franchisor. It’s up to you how you proceed. Sometimes you can get better deals from the franchisor.


How is competition handled?

One thing you want to know is how the franchisor limits competition. How many franchises do they allow in a specific area of the country and more specifically your local area? Also, do they make you sign a non-compete clause?


What should I consider before buying a franchise?

You need to make sure that the business is something you will like doing and has the potential to provide the type of income you need to earn each year. There is no point in owning a franchise that won’t allow you to earn an income in the manner you want to earn it. For example, some franchises allow for absentee ownership and still earn a profit, while some do not.

Final thoughts…

There are a lot of questions to get answered before you invest in a franchise. Understand that it is a business, and if you can’t earn a profit you could forfeit your investment Take the time you need to take to chose the right company for you.


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