Before you jump on the franchising bandwagon, you need to research the different ventures and find the best franchise for you.
Franchising is one of the fastest growing opportunities for veterans in the country. In fact, the Veterans Transition Franchise Initiative reports that 612 veterans have acquired franchises this year. And, more than 150 additional veterans are considering purchasing franchises.
However, before you jump on the franchising bandwagon, you need to research the different ventures and find the best franchise for you. Here are tips from the Small Business Association to get you started:
Disclosure
Before investing in any franchise system, be sure to get a copy of the franchiser's disclosure document. Sometimes this document is called a Franchise Offering Circular. Under the FTC's Franchise Rule, you must receive the document at least 10 business days before you are asked to sign any contract or pay any money to the franchiser. You should read the entire disclosure document; make sure you understand all of the provisions. Get clarification or answers to your concerns before you invest.
Business Background
The disclosure document identifies the executives of the franchise system and describes their prior experience. Consider not only their general business background, but their experience in managing a franchise system. Also consider how long they have been with the company. Investing with an inexperienced franchiser may be riskier than investing with an experienced one.
Litigation History
The disclosure document helps you assess the background of the franchiser and its executives by requiring the disclosure of prior litigation. The disclosure document tells you if the franchiser or any of its executive officers have been convicted of felonies involving, for example, fraud, any violation of franchise law, unfair or deceptive practices law, or are subject to any state or federal injunctions involving similar misconduct. It also will tell you if the franchiser or any of its executives have been held liable or settled a civil action involving the franchise relationship. A number of claims against the franchiser may indicate that it has not performed according to its agreements, or, at the very least, that franchisees have been dissatisfied with the franchiser's performance. Be aware that some franchisers may try to conceal an executive's litigation history by removing the individual's name from their disclosure documents.
Bankruptcy
The disclosure document tells you if the franchiser or any of its executives have recently been involved in a bankruptcy. This will help you to assess the franchiser's financial stability and general business acumen as well as predict if the company is financially capable of delivering promised support services.
