Franchise A Business

Thursday, March 25, 2010

Is Opening a Franchise Business the Safe Way to Go?

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Have you decided you would like to own your own business? Are you thinking that a safe way to start out in the business world is to buy a Franchise? If you assume that by paying a Franchise fee you will be protected by the franchisor you could be in for a huge disappointment.

The Franchise agreement you sign is designed to protect the Franchisor - not you. Make sure you have your own lawyer read it and tell you what rights - if any you have under your agreement. You will also want to make sure that the cost outline you are given is accurate and that there are no costs which are not listed.

The first step in opening your franchise is the build out. Your franchisor will take bids and choose your Contractor. Insist on seeing these bids and keep a copy. If there is a dispute down the road with the Contractor they will come in handy.

The Franchisor will then choose your Contractor (I was not allowed any input on that decision). If you are not happy with their choice inform them in writing. Make sure you have all correspondence in writing and keep it. If you have a phone conversation with anyone from your franchise head office or your contractor always recap it in an email and get a reply and save it.

As soon as your contractor is hired you will probably be asked to sign an agreement with the contractor and give them a hefty deposit. (One third of your build out cost is normal) Do not assume that because your Franchisor has told you to sign this contract that they have even looked at it.

You must have it reviewed by your own lawyer before you write the first cheque. The contactor will not want to start before they get the deposit and the Franchisor will want to get the store opened as soon as possible. Even if you are holding up production and everyone is pressuring you to write the cheque - see your lawyer first. I didn't and ended up regretting it.

Remember always that opening a Franchise is the same as opening any business. You must be aware of your rights and limitations regarding anything you sign. Always get legal advice before signing and protect your rights. Even the best franchisors will protect themselves first in any legal dispute.

You may want to consider opening your own business and not a Franchise.

Patricia Molloy

http://freedomtochoosenow.com

Article Source: http://EzineArticles.com/?expert=Patricia_Molloy

Labels: franchise a business, opening a franchise business, safe franchise business