What Should I Consider Before Buying a Franchise?

Among the points IFA recommends for investigation are:

  • The type of experience required in the franchised business.
  • The hours and personal commitment necessary to run the business.
  • The track record of the franchisor, and the business experience of its officers and directors.
  • How other franchisees in the same system are doing.
  • How much it will cost to get into the franchise.
  • How much you're going to pay for the continuing right to operate the business.
  • If there are any products or services you must buy from the franchisor and how and by whom they are supplied.
  • The terms and conditions under which the franchise relationship can be terminated or renewed, and how many franchisees have left the system during the past few years.
  • The financial condition of the franchisor and its system.

The Federal Trade Commission (www.ftc.gov) and IFA (www.franchise.org) have many helpful publications and resources. IFA also strongly recommends that you engage an attorney to examine the contract, as well as a professional accountant.