Talk to Other Franchisees before Buying a Franchise

franchise, franchisee, Illinois business law attorneyStarting your own business can certainly be a rewarding experience. Many prospective business owners, however, are hesitant to develop a company from the ground up, creating a niche or serving an unfulfilled need in the local community. Instead, they look toward purchasing a franchise, allowing them to own and operate a business with an established reputation and recognizable trademarks. One of the most common questions I get from potential franchise owners, though, is how to prepare for such a venture. As in most business situations, I always suggest thorough research, and, in the case of a franchise, speaking with other owners in the same franchise to learn from their experience.

Opening a Franchise

From the outside, buying a franchise may seem like a shortcut to profitable business ownership. A buyer, or franchisee, purchases the rights to use the business model, trademarks, and brand name of a larger company to own and operate a location of that company. The parent company, or franchisor, establishes the rules that franchisees must follow in order to be permitted to use the company’s name and trademarks. Some of the most recognizable names in American business are commonly franchised companies, including McDonald’s, 7-Eleven, and Supercuts.

Do Your Homework

When you are considering buying a franchise of any kind, your most valuable resources are often other franchisees with the same company. Of course, you should speak with a business planning attorney, as well, to go over the Franchise Disclosure Document and any applicable contracts. It is also wise to conduct your own market research and look for objective opinions regarding both the industry and the specific franchisor so that you can be aware of any potential concerns.

Current and previous franchisees, however, can offer insight from a very unique perspective. They will have first-hand experience in dealing with the parent company on a day-to-day basis and have faced many of the same challenges that likely await you. Make use of other owners’ knowledge by finding out:

  • Their general feelings about the company: You may be able to find this information in online franchise forums or by speaking directly to individual owners, but get an understanding of the overall impression that franchisees have about the franchisor;
  • Why a particular franchise failed: This can be extremely valuable information from a former owner. Was the parent company invested in saving the franchise? Were the financial obligations to the franchisor too much? If possible, learn from an owner’s mistakes;
  • Running the business: You need to clearly understand what will be expected of you as the franchise owner. For some businesses, it may involve sitting in a back office and making sales calls. For others, it may be working side-by-side with hourly employees to keep customers happy. Know what you want to do and be sure the franchise offers you the opportunity to do it; and
  • Would they do it again? Of course, the owner of a very profitable location would probably say yes, but find the owner of a moderately successful franchise and the answer may be different. How he or she responds can speak louder than any promotional material the franchisor may have available.

Legal Help for Buying a Franchise

Once you have done your research and made the decision to move forward with owning a franchise, your next call should be to a Naperville business law attorney at the Gierach Law Firm. For more than 30 years, we have been representing the best interests of business owner and entrepreneurs throughout northern Illinois. We will help you review your franchise documents and contracts, ensuring you the best possibility for success in your new venture. Call our office today for more information.