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Buying a franchise – Franchise Investment appraisal and document information Franchise – Franchise expert advice and franchise tax

Millions of people dream of owning their own business. After the independence of being your own boss brings, the security nobody can fire you, enjoying a good income – and most successful – the accumulation of wealth and prosperity. Unfortunately cards are stacked against a new small business making it big – or at all. A constant stream of problems makes competition from large chains, sophisticated too intense. Many start-ups end as failures.

Purchasing a franchise represents a different approach to starting a business. For an initial franchise fee plus ongoing royalty payments, the parents learn their business model and methods to the franchise operator who shoulders all have operational responsibilities and financial output. Some statistics are impressive: it is said more than 40% of total sales by U.S. outlets are franchised. While franchise giants like McDonald's, KFC, H & R Block and Radio Shack are familiar, household names, franchises are available in a wide range of industries. List companies selling franchises more than 3,000 in over 100 different categories.

American Sleep … or nightmare?
But as the franchise is a chance to become rich, is also an opportunity to get stung. A number of franchise operators earn less alarming than the salary minimum, the work of seven days, sixty to eighty hours a week, pursuing an expensive and difficult to achieve American Dream that turns into a nightmare. Since payment of franchise fees is over the top, as a percentage of gross sales or a fixed minimum amount the company receives an income stream for free security, even if their units are operating at a loss for the franchise and sold over and again for new buyers, confident. Internet is full of comments from many people who lost $ 250,000 or more on concepts such as eBay Deliver stores (iSold It) 30 minutes of fitness concepts (Curves) The UPS Store, etc. However, many of these companies continue to sell and resell franchises over and over again. How? Because there are enough people who think they can "believe" the way of success, even with a concept or a business that does not work on the market. As discussed above, investment decisions in many cases, are incredibly franchise based on emotion, not logic or even common sense.

Property and be your own boss?
The pride of owning your own boss and is touted recruiting sentences Ads of the franchise. But these are more fantasy than reality. Although obtaining all the financial risks, headaches and stress of the property business, what really matters? The owner of a franchise is only a trademark license (or service mark) of a company that dictates every aspect business operations. Thus, the real boss is not you, but the company selling the franchise rights. . . and the sea of franchise obligations.

Equity build?
But at least you're building equity, real estate values as going beyond their investment money to compensate those years of hard work and long hours – right? Wrong – at least in the world of franchising. Franchising reserves the right to buy society in all its operations wholesale price, if your contract is not respected. The purchase right set-default assessments based on assets such as book value or liquidation. These valuation methods provide a minimum compensation (the value used by some filing, office furniture, equipment, etc.) and is generally not used to determine the selling price of any company.

Absolutely no compensation paid goodwill is established, the value of a company that generates $ X in the result of cash flow every month, after years effort, investment and spending – which eliminates the ownership of the most valuable assets. Sure, you may be able to sell its third franchise for a sale price that includes an assessment based on the results. But this is only possible if:
(A) you can find a buyer who is willing to live in the complexity of a franchise relationship, and
(B) you own a franchise that shows the health benefits.

The following is a checklist of the basic allowance and advice collected by the franchise lawyer and franchise expert, Mr. Franchise based on a review of over 500 franchise offering circular and twenty more than eight years experience in the franchising industry – including ownership a successful franchise. These factors to be considered for a franchise investment will help to remove 95% of the companies you are considering. Then you can concentrate their efforts in the "5%" cream of the crop "Companies that should be considered. That list of franchise assumes that you are suitable and willing to live within the limits of a franchise relationship. It also assumes the company the franchise

(1) has successfully operated the franchise concept to at least five years in various locations
(2) is not plagued by disputes and litigation of franchise franchise franchise disaffected
(3) not unusually high dropout rates franchise (owners who have "switched off") and
(4) has concluded a contract balanced, fair franchise.

Sold It – An American dream became a nightmare
An example of a franchise to questions that do not meet basic threshold iSold It is a service eBay Store franchise. The company started its one and single store belonging to the company in November 2003. A few weeks later, December 10, 2003, filed an application to sell franchises. The California Department of Corporations did not say "What do you think?" You do business the past few weeks, how can we consider the sale of franchises? "It is not required in this position as a risk factor on the cover of The Franchise Offering Circular, as it should. The responsibilities are assumed by the disclosure society (and their lawyers), which is one of many issues in franchising disputes in the future.

Instead this, the department has limited its filing fee of $ 675 and issued an order declaring the franchise registration effective the next day – December 11, 2003. Then the magic of marketing has taken over the franchise. In 2006, the company had 200 franchise stores operating in the Fall and has been hailed by Entrepreneur Magazine as # 1 in its list of "Top New Franchise for 2007" and # 17 in the "Hotter Than Hot List of the franchise." Entrepreneur Magazine, which requires franchise companies to submit their FOC (Franchise Offering Circular) to discuss ways that each year before they are mentioned, it took into account the high attrition rate (franchise owners leaving the system) or the fact that his statements States FOC financial statements showed the company had not operated profitably since 2004 and serious negative iSold It and gave the A # Top list of new franchises in 2007. How all this? This is another bizarre reality in the world of franchising.

States free society audited financial statements for the year ended 12-31-05 showed an operating loss of $ 1.1 million. Nine months later, in September 2006, the net deficit increased holding more than $ 4 million.

In its November 3, 2006 Franchise Offering Circular, the table in Article 20, has revealed A total of 10 franchise owners leaving the system, however, a manual count of the exhibition "The franchisees Ex D-3" showed a very different – 44. A similar "discrepancy" exists about franchise transfers. Article 20 says 12 transfers, while Figure D-3 show 27.

In a long overdue letter distributed to franchise owners April 5, 2007, CEO Ken Sully painted a dire picture of a dream American has become a nightmare. Mr. Sully's letter admitted the company has not been profitable since 2004 (based on audited financial data, the company showed operating income of $ 356,286 only in 2004, before the steep downward spiral of 2005 and 2006). More than 60 franchised stores have closed and many others struggle to survive. Mr. Sully observed "Unfortunately, many people who believed passionately in the possibility for the category lost significant investments, including homes and retirement savings. "

They have lost their homes and retirement savings? How could it happen a joke? I advised a number of people perceived an iSold It franchise and warned against all investments. Fortunately He followed my advice. The concept has never been proven in the marketplace before franchise efforts began, violating the most basic precepts Emergency 101. I also felt the team management had no authority to strong franchise training program five days have been scant. Finally, the operating company growing franchise in the red and had a high rate of attrition (owners leaving the system). It does not take much brain power to see was an accident waiting to happen. I predicted the bubble would burst and, unfortunately, do.

Common sense could have and should have prevented many people from losing a lot. Unfortunately franchises attract people's emotions (The passions and potential, to use Mr. Sully's words) and we try to keep common sense and business logic of the equation of the purchase. If a business franchise is able to obtain a qualification in a media list, the sale is even easier. Reprint rank high on lists like Entrepreneur Magazine, included in the package of franchise buyers, who are lulled into a false sense of security and begin to run into each other in the rush to sign before someone else takes their desired territory (another favorite closing technique selling franchises).

ISold It! changed its convenience to the end of May 2007 to add little, Language risk factor behind the cover of its franchise offering circular. Mmmm … perhaps read my previous comments and I did a little research. The new flag of convenience language cover page risk factor explains their franchise system is still new and unproven. "It's very interesting. How can one say about a franchise system, which is approaching its fourth anniversary, is still "new" Perhaps they see things from a "How old is the universe? The word "unsubstantiated" is another set of words. The system is certainly clear that many people, "said Sully," have lost significant investments, including housing and retirement savings. "Why not use this quote directly in their franchise offering circular? A. You can not sell a franchise in this way.

In the August 31, 2007 Business Week article, CEO Sully said he was not required to disclose these risk factors Pavilion of convenience. His reasoning: "We told everyone that it is like nature, Wild West," he said. "This is a new concept and no knew exactly where he went. "Disclosure has been added to the UFOC recently said," because the number of stores which are not understanding the complexity of the business. "Hello?" Do not tell his franchise investors after the fact what was required to disclose in the FOC before they bought so they can make an informed investment decision. That is the purpose of disclosure laws of the franchise. And calling for written disclosure of risk factors in the PDC is not necessary if you hear a potential buyer of a seller verbal wild, wild story the West does not take into account the franchise disclosure responsibilities and is really an admission the company failed in this regard. With the amendment, under a flag of convenience, the company continues to march forward with great marketing efforts of the franchise.

Now We will review the list of franchise and factors to consider before you jump to the franchise.

Industry Trends
The franchise is a high-tech industry is doing well now and should do well in the future despite a slowing economy? Education and improving home care services are stable categories. The food is too saturated in general and, except in exceptional circumstances not worth the high investment, long hours, headaches and marginal revenue.

TOTAL INVESTMENT initial franchise
In general, do not expect a franchise requires an initial investment of five digits of the franchise to produce a six figure income. Like most things in life you get what you pay for. On the other hand, do not assume a six-figure investment will lead to an income of six figures. Be realistic and prudent. The deductible is the total initial investment range (including working capital) $ 125.00 or less and the maximum investment of less than $ 200,000? You can find solid companies in this level of investment if you're willing to look around.

Do not forget to consider long term financial commitments, including the rental of real property (See below under "LEASING AND LOCATION). In addition, the estimate of working capital (Called "supplementary funds" in paragraph 7 of the circular franchise company) does not cover operations until the equilibrium point. It only covers a short initial phase (usually three months) the costs of operating the equilibrium (Where revenues cover operating costs) may not occur for two years or more, knowing that only that will pass through the first 90 days is not useful – in fact, can be configured to financial suicide. In many cases, the balance may require more reserve funds investment original total. Never forget the name of the article 7 of the franchise offering circular: "The initial investment." If you do not have a capital Reserve enough to reach the critical point of balance, all of your investments go down the drain and the failure occurs franchise.

An owner of the franchise in a franchise investment low and relatively low cost window cleaning, said his biggest surprise was when they actually had its franchise to be profitable. Upon entering, he thought it would be 12-15 months. He eventually take twice as long. Fortunately, I had the cash reserve sufficient to make it, but refused to say what their actual benefits of franchise or income level has been taken after "excess profits." If you is just above breakeven operating and make less than minimum wage is that the definition of any successful person?

REAL BUSINESS
Is this legitimate retail business, as opposed to a "work at home" operation? The vast majority of working outside concepts of home produce income marginal at best.

Experience managing FRANCHISE
Does the franchisor management team (The company selling the franchise), management performance and proven experience in operating a franchise (not just people who have sold franchises)? If not, it's a big red flag. Many companies fall into the franchise and not realize they are in a new company – which requires complete management skills and ability to navigate the franchise relationship. An infrastructure of experienced management and franchise must be in place. If the franchise management team lacks strong franchise authorities, or to receive ongoing advice from qualified persons could also make a trip to Las Vegas with the money that is the intention to invest. Your chances of losing money to cope are roughly equal.

normal working hours and days lncome ADEQUATE RELIEF
Is this the type of business allows you to work a normal week of five days of forty hours? Life is too short for the life of seven days from sixty to eighty hours a week, destroyed executioner health, family and budget. Financially, we have calculated the true hourly rate for franchise owners who work these workaholic hours and found many are much less than the minimum wage. A couple who ran a pizza franchise $ 200,000 in a shopping center of exclusive luxury were surprised discover that they were fifty cents per hour each. Only one level to collect revenue or to justify the investment of the franchise. Much operators in more fast food franchises, even less, or work at a loss of their funds, retirement savings, homes, etc. have been exhausted. Buying a franchise in a non-food sector does not necessarily improve the image of the provision of the franchise. In a 2006 article "Mail Boxes Etc. owners struggle Conversion UPS, a Mail Boxes, Etc. franchise owner who operated his franchise since 1993 reported earnings of a typical MBE store like his $ 16,000 per year after payment of royalties and publishing rights to the franchise company. Which calculates to about $ 8.33 per hour for a workweek of forty hours, the exposure of a worker, the wage fast food.

Another major shortcoming of disclosures in the offering circular, franchise does not say how much money the franchises in the network are made. Instead of answer the question what is more important to a franchise investment decision, the franchise disclosure laws that the "option" franchises for the company to answer or not. If they meet this crucial issue, it is in the starting 19. But do not hold your breath – more 90% of franchise companies "decide" not to answer this question. This is another bizarre reality in the world of franchising. Although collecting Monthly full (and in many cases, weekly) profit and loss statements The financial terms of its franchise owners, and know exactly what make their franchises (or lose) more than 90% decided not to share this information before buying one of their franchises. A number of sellers of franchises have told people to ask this question: "The franchise laws do not allow us to answer that question." Nothing could be further from the truth.

And just because you're a business leader to make a six figure income now, do not assume that this level of investment income doubles franchise simply because the company "approves" your application. One such leader, despite a plethora of negative comments current and former owners of the franchise that had lost everything, marched with his investment in a franchise concept of fitness in 30 minutes. Despite a a six figure income, not a penny invested in the evaluation of free vocational guidance and said it took an act of faith, hope to build wings on the way down. Build your wings on the descent? (And the sound is) crazy, but it happens all the time. Because maneuvers of vendor rebate, too many investment decisions based on emotion franchise. Prior business skills, the business sense (and even common sense) are short-circuited. Needless to say, if the entrepreneur makes an investment decision similar businesses their employers pay six-figure salary, she quickly pulled.

Minimum Number of employees
Can you operate the franchise with six employees or less? Managing dozens (or for some fast food operations – hundreds) of minimum wage teenagers who are constantly quitting or simply not going to work is a real pain in the ….. Well, you know what we mean.

RENTAL AND LEASING
For most retail franchises, the triple net lease Location is the biggest financial commitment, over the total investment for the franchise. However, the typical lease real property and its ramifications disclosure is not required in a franchise offering circular (FOC). For example, an estimate you need 2,000 square feet of space with a forecast rental $ 5 to $ 10 per foot per month is normally indicated in the initial array of investment Franchise Offering Circular as a property lease $ 10,000 to $ 20,000. A footnote to the table of investment can say "takes 2,000 square meters $ 5 to $ 10 a foot. "

But this is only the beginning of a long story longer. The lease is normally one year triple-net lease 5-10. Therefore, the financial commitment when the market is 10/foot company at least $ 600,000 (U.S. $ 5/foot for 5 years) $ 2.4 million (a $ 10 year). And these are not substantial, additional obligations to pay all taxes on property owners annual, insurance, area of operation county, etc. With hundreds of thousands (or millions) of dollars in bonds financial participation, personal guarantees and other risks, rather than a warm fuzzy feeling that all work is necessary.

key questions to ask here:

(A) is the franchise that you think that can be used in a business district under a commercial lease? Avoid high costs and deductibles requiring triple net lease of a local sale and lease associated with extravagant visible traffic areas feet high as malls. You will sleep better at night.

(B) What is your commitment Total financial under lease?

(C) Do you have enough liquid assets (or a loan, guarantee sufficient liquid thirds) to comply with proprietary standard rental qualifications?

Otherwise, you might as well forget to invest in the franchise. Or worse, to participate in a franchise and questionable business model, and then realize you've made a big mistake – and find out who is on the hook personally for a lease obligation 500,000 $ +.

A related real estate variant is to obtain a lease in time (with renewal options) to recoup their investment and profit. In July 2005, Attorney quarantine bought a subsidy from the existing ice cream shop $ 375,000, thinking it was a "Unique opportunity" of a lifetime. "With the trade of his briefcase a scoop of ice cream, the company participated in the cream Chilled 11 days of the University and supported the operations of this store. It turned out that was the opportunity – but only inherit a store with many problems. These problems include (but are not limited to) a lease expiring next summer and an owner who had already announced the contract would not be renewed. Instead of paying $ 100,000 plus relocation expenses, the lawyer returned the practice of law, but continues to pay the remaining $ 350,000 loan taken out to buy the franchise in life. Although there is an instance being free, is another case of FMD "free" – this time attacking a professional no less. Who would pay $ 375,000 for an existing grant distribution without checking the lease? Sounds like another bad lawyer joke, but I can assure you not to laugh. business fundamentals have been ignored or forgotten in the race to acquire the opportunity of a lifetime. And I'm willing to bet a dollar spent on advice qualified, pre-investment franchise.

IMAGE & LIFESTYLE
How to cook hamburgers, frozen in portions and cleaning bathrooms at the image of what you do in life? Investing in a franchise is the most important decision you make financial and psychological forever. Many future franchise owners do not realize they are using almost every hat at some point, the seller bad debt collection, employees shooting concierge bathroom. The franchisee is usually the first to arrive in the morning – and the last turn off lights at night. And you have to forget the profits of companies such as vacation pay, holiday pay and compensation disease. Instead, the financial pressures of replacing unexpected events and money draining their savings accounts and retirement. The typical hours of work and responsibilities of the franchise you are considering your personal image and desired lifestyle? You can meet some of these before investment work for a couple of weeks in a deprivation of property of one of the existing franchise owners.

Value real FRANCHISE
The Buying a franchise on a chip "franchise company Blue who has spent decades and hundreds of millions in advertising for your brand can do much meaningless. These companies have a "real franchise value" that compensates for the drawbacks long-term and ongoing royalty payments to fund advertising. Often, these payments Additional literally mean the difference between making a profit and at a loss. In unknown franchise chains with brand recognition that little or nothing, that the franchise buyer is building its brand from scratch, and make some serious drawbacks, competitive long term.

In these unknown franchise chains, you must ask a simple question, common sense. What is the value of the company that provides you could not learn by themselves to work in one of their premises as an employee for a couple months? Franchise tell the truth, that many companies are selling franchises unknown is only a business opportunity – teaching you how entering a new business. But unlike a business opportunity seller that charges a fee to help inclusive in the company they call a "franchise" and charge fees and current advertising rates are a McDonald's or other large chip franchise company.

The reality is that not McDonalds type franchise – not even close to one. In most of these lesser-known franchise chains, you'd be much better start a business beyond your own. You can learn more or all of their so-called "secrets" of the series of interviews and process of talking with (and possibly a bit of time working for) the current owners of the franchise.

FRANCHISE PROFITABILITY and "success"
Dr Timothy Bates study published in 1993 by business growth and investments Institute Washington, DC (and another study published in 1996) was the first to compare the initial costs, profitability and franchise failure rate of franchise business franchise vs. nonfranchised. In his analysis of some 7270 companies in the testing period, Dr. Bates found that the initial capital for an average of $ 85,293 franchise business compared to the average for companies starting capital of $ 30,156 nonfranchised. In 1987, the company realized an average net income before taxes 19,744 nonfranchised $, Compared to a loss of (- $ 1,548) for business assets. Mr Bates concluded "Despite greater income, better capitalization, and its supposed advantages of affiliation to a parent franchisor, the franchisees behind cohort young firms in profitability and survival rates. "

Franchise companies ignore both studies by Dr. Bates, he claims never happened. In contrast, other techniques are used. For example, some companies use misleading figures of a franchise successful to sell their franchises. Its promotional material say franchises generally enjoy a success rate of 90%, compared to less than 20% of independents. These figures based on unverified information provided thirty years ago by a SELECT, unrepresentative group of franchise companies. A third of companies receiving for "questionnaires" elected not to participate. There is no verification of any information provided by the franchise companies, even checks by random sampling. Nor was any effort to identify companies who franchise with franchise owners of its chain, had gone bankrupt.

Even the most recent "studies" said the nine out of ten franchise owners (90%) believe that their right to vote is somewhat or very successful also suffer from serious methodological flaws. They are simply telephone surveys of franchise owners who were still active and was asked to say (and without any definition of "Successful"), if they believe their company was "very satisfactory" something without success, "some success" or "very successful." franchise owners who have gone bankrupt or in bankruptcy are not included in the survey.

Even if the terms are defined and obtained a sample representative, franchise owners may be a group particular. Hence the need, as in the studies of Dr. Bates, to examine the financial data. Memory that the evaluation of existing franchise for a client. I asked the current owner of the franchise to make your business a success. He said he was a great success. But their financial statements reveals a different picture. I've never had a dollar out of business by himself, never realized profits for two years running and was on the verge of bankruptcy. Another owner of a bakery franchise, interviewed by Business Week, says that the success of the franchise means "adjusting your definition of success." He says he makes a profit, but refused to say what is or if he ever got his $ 250,000 investment, plus the initial deductible. Incredibly, he insists that in business "for lifestyle reasons, not for profit." Huh? It is likely that a quote from materials supply company franchise. In the world of franchising "success" and "profitability" are very subjective terms.

FREE Riders find your perfect match?
T is the franchise you are considering having your own house in the marketing department, or used outside the corridors of the franchise? The use of franchise brokers is a definite red flag. First, it indicates the franchise company is very serious not to let him join the franchise network, or worse, desperate to sell franchises. Second, the agents receive a commission for surplus 50% or more of the franchise tax that you pay the franchise company. Franchise Broker realities: (1) Their service is certainly not "free" in Despite these and similar lies. It is common sense – How can we offer a "free" service and survive in business? Unfortunately, common sense on part of the brain tends to short-circuit when the franchise brainwashing process begins. The simple truth is that if you buy one of the franchises argue, the money goes to the business franchise, so in the pocket of the corridor. If anyone ever calculated the amount of time spent on collecting the $ 15,000 or $ 20,000 of the Commission, is probably much more than a brain surgeon earns. (2) officers franchise definitely not your best interests mind. They do or say what they need to do a deal and earn their commission.

Many claim that the brokers franchise will help you find a franchise that is the perfect combination for you. At first it sounds good. There is some evidence of personality and examination of their finances. At the end of the day, which represent (and steer towards) a handful of small franchise companies you've never heard speak to address. A detailed analysis often reveals these highly touted franchises produce mediocre performances in the minimum wage or less funding. However, franchise brokers do not mention this, and people remain dependent on their recommendations, believing that the broker represents. Nothing could be further truth.

In addition, many franchise brokers call themselves franchise consultants. A franchise consultant is usually an independent consultant offering advice to others (usually franchise companies or companies wanting to franchise your business) to a fee. This makes their advice more impartial in theory, provided they are not compensated by third parties. Because they are not legally required to disclose the actual or potential conflicts of interest, it is important to ask questions. For example, if you're a franchise consultant is to recommend the best franchises, "get paid anything by the companies on your list? This could be a Commission, or to check prices rebound. As mentioned Brokers franchise consultants say many "free" to hide his true identity. By So make sure if you're dealing with a consultant franchise, he or she is not really a franchise undercover agent.

FREE disclosure laws
The laws on disclosure franchise, while requiring franchise companies to provide limited information, do not approach the protection of their interests. For example, as mentioned above, Article 7 of the franchise offering circular requires only an estimate of additional funds within 90 days of information on investments. But economic reality is what you need to know the additional funds needed to reach the equilibrium point, which may take years, or all of the "initial" investment down the drain. One might think that this type of information should be taken by disclosure laws franchise, but it is not.

FREE registration laws
Never assume that because a company has registered its franchise bid circular in your state, someone from the State has adopted or amended the document in its favor. Franchise registration is obtained by simply sending documents and payment of a filing fee – period. In most cases, the Franchise Offering Circular is given notice very limited exceptions for specific state are present.

I remember filing a registration application a new franchise company in a state that has the reputation of being one of the hardest "The law on registration of franchise in the country. After the review period established in three weeks, we adopted the law, and heard nothing, I called the examiner assigned demand. After looking through their pictures, they finally found the information memorandum and a request for my client. He apologized to completely lose the file immediately and committed themselves to examine the request and remember. Ten minutes later he called me to tell me that had ended and was taken to the actual recording that day. Ten minutes of review and free society in the state has green light. This is not an isolated case – is past all the time.

The rules must meet a franchise to sell franchises; What are the requirements to franchise a business?
Incredibly, the answer is – no. There are no minimum standards or requirements to franchise a business, except the preparation of a franchise offering circular. This is another bizarre reality in the world of franchising.

You and I could have no business experience, forming a new corporation or LLC, capitalize only $ 1 for produce a Franchise Disclosure Document and submit at any time of the registration of the franchise. Although the offer may be subject to seizure or escrow requirement because of the small-cap ($ 1), we would still get the message "social" and be able to sell franchises until we want.

In these 14 states, the registration duties may not receive money until each franchise actually opened, but simply to pay bond would alleviate this difficulty in the franchise registration states. And in most States, there are no laws on the registration of franchise, he would be able to sell franchises and collect fees with impunity once we have compiled our Franchise Offering Circular. The FTC Franchise Rule federal government does not protect against this risk either – only requires disclosure (ie provide a Franchise Backgrounder) and has no component registration or minimum standards for franchise businesses.

basic protections for investors and requirements are in federal and state for more than 50 years have never been deferred investments of the franchise. Although most of the largest non-Blue could benefit from selling a single share in his company, which is entirely free of charge Franchise fees unlimited, running royalties, equipment and other purchases as well as you do incur financial obligations totaling hundreds of thousands dollars, even millions, in some cases. This is not information that is likely to be found in articles on light franchises and businesses Franchise common in the media.

FINAL COMMENTS
Remember, you are the only guardian when it comes to your investment franchise. It's really an environment where the phrase "buyer beware" applies. So before you sign on the line and do not be no doubt the most serious commitment of financial and emotional life, getting all the facts and figures.

A couple told me after the fact ", has invested two million dollars in a new franchise company. The contract they signed gave them no right to terminate, regardless of corporation franchise or not to do. Of course, the contract gave the franchise company unlimited capacity of termination, a right that has been exercised. The business franchise management team had no person with experience in running a franchise business. Incredibly, couple had not spent a penny in a legal opinion or business before investing $ 2 million. The company once friendly franchise has become a formidable enemy and was about to take the franchise. Unfortunately, this happens too often in the franchise investment. Decisions are taken in diffuse feelings and emotions. In an effort to save a few thousand dollars, investors risk homes franchise, retirement savings, everything they have. Then they scratch their heads in amazement later after a terrible and inevitable problems arise often wonder how they could have had blinders on.

Another level of research is essential if you get the franchise value true and if you would rather do business on their own. In the vast majority of franchises touted by unknown companies, franchise value is not there and do the same thing independently makes more economic sense and actually decreases the risk of failure.

Finally, and this applies to franchise investments and invest in any business, develop a plan to succeed, but also plan an exit strategy franchise that minimizes the financial risk if things are not resolved. Both plans must be carefully reflected before the investment is made. Do not wait until problems arise to start thinking about a franchise exit strategy – By is often too little and too late.

For more information, visit the Franchise Foundations website.

© 1990-2008, Kevin B. Murphy BS, MBA, JD – All Rights Reserved

About the Author

Known in the industry as Mr. Franchise, Mr. Murphy is an internationally-known franchise attorney, franchise expert, author, and instructor. For the past twenty-eight years he has specialized exclusively in the franchise industry and owned a very successful franchise in the home improvement field. He has written over 30 publications, including four books on franchising and one book on trade secrets. Mr. Franchise has drafted, reviewed and negotiated more than 500 franchise offering circulars and instructs franchise company personnel in best franchise practices. He also teaches franchise, licensing and intellectual property courses to attorneys. Mr. Franchise is a franchise attorney and Director of Operations for Franchise Foundations a San Francisco-based professional law corporation.

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