HOW TO BUY A FRANCHISE

A Checklist Of Questions To Ask And Get Answers Before You Sign The Papers

    Franchise businesses such as Wendy's, McDonald's and Jack-In-The-Box
    are booming.  The people setting up franchise ideas and businesses
    know a good thing, and are really promoting this idea. Franchises
    for just about every conceivable kind of business are being sold in
    ever increasing numbers.

    Some franchises are very good.  They treat both the franchisor and
    the franchisee very well.  Others are very one-sided.  Still others
    are almost total rip-offs that trap one into paying ten to fifty
    times the actual value of the business idea, equipment, or what ever
    it is they are trying to get you to buy.

    Before putting any money into a franchise, you should investigate
    everything completely.  We've prepared a list of questions you
    should be asking, and should get satisfactory answers to before
    investing.

      1.  Has your attorney studied the franchise contract, discussed it
          completely with you, and do you both approve it without
          reservations?

      2.  Does the franchise require you to take any steps which are
          either illegal or even border on illegal, or are otherwise
          questionable or unwise in your state, county or city?

      3.  Does the franchise give you an exclusive territory for the
          length of the franchise period, or can the franchisor sell a
          second or third franchise in your territory?

      4.  Is this franchisor connected in any way with any other
          franchise company handling similar products or services?

      5.  If you answered yes to the above question, what is your
          protection against the second franchising company?

      6.  Under what circumstances can you end the franchise contract,
          and at what costs to you?

      7.  If you sell your franchise, will you be compensated for your
          goodwill or will it be lost to you?

      8.  How many years has the firm offering you the franchise been in
          operation?

      9.  Does the company offering you this franchise have a reputation
          for honesty and fair dealing among its franchisees?

     10.  Has the franchisor shown you any certified figures indicating
          exact net profits of one or more of its members, and have you
          personally checked the figures with these people?

     11.  Will the franchisor assist you with:  a) A management training
          program; b) An employee training program; c) A public
          relations and advertising program; d) Capital; e) Credit; f)
          Merchandising ideas?

     12.  If needed, will the franchisor assist you in finding a
          suitable location?

     13.  Is the franchising firm adequately financed so that it can
          carry out its stated plans?

     14.  Does the franchisor have experienced management, trained
          in-depth?

     15.  Exactly what can the franchisor do for you that you cannot do
          for yourself?

     16.  Has the franchisor investigated you carefully enough to assure
          itself that you can successfully operate at a profit to both
          of you?

     17.  Does your state have a law regulating the sale of franchises,
          and has the franchisor complied with that law to your
          satisfaction?

     18.  How much equity capital will you need to purchase the
          franchise and operate it until your income equals your
          expenses?

    If you can get the answers to each of these questions, and those
    answers satisfy you, then you're probably thinking about buying a
    pretty good franchise deal.  However, if you're in doubt about any
    of these points, be sure to check it out and know the answers for
    certain before you invest or sign anything.

    Buying a franchise can give you a measure of security, and in some
    cases, sure-fire profits.  Business surveys show that fewer than 20
    percent of all new franchised businesses fail.  This is in
    comparison to a 60 to 80 percent failure rate for all new businesses
    started in this country each year.

    Information regarding specific franchising ideas can be found in the
    franchising directories, which are generally available at the local
    library.  Often there will be a notice posted in franchise outlets
    themselves.

    If you can afford the entry into this business, statistics are on
    your side.  You are now armed with some CAUTION and STOP and GO
    signs!