Keep in mind that a primary reason for investing in the franchise, as opposed to starting your own business, is training and assistance.
Before you invest in your first franchise, you need to understand the restrictions. For example, your franchiser may restrict how you operate your outlet. The disclosure document tells you if the franchiser limits:
- The supplier of goods from whom you may purchase.
- The goods or services you may offer for sale.
- The customers to whom you can offer goods or services.
- The territory in which you can sell goods or services.
Understand that restrictions such as these may significantly limit your ability to exercise your own business judgment in operating your outlet.
Terminations
The disclosure document tells you the conditions under which the franchiser may terminate your franchise and your obligations to the franchiser after termination. It also tells you the conditions under which you can renew, sell, or assign your franchise to other parties.
Training and Other Assistance
The disclosure document will explain the franchiser's training and assistance program. Make sure you understand the level of training offered. The following checklist will help you ask the right questions:
- How many employees are eligible for training?
- Can new employees receive training and, if so, is there any additional cost?
- How long are the training sessions?
- How much time is spent on technical training, business management training, and marketing?
- Who teaches the training courses and what are their qualifications?
- What type of ongoing training does the company offer and at what cost?
- Whom can you speak to if problems arise?
- How many support personnel are assigned to your area?
- How many franchisees will the support personnel service?
- Will someone be available to come to your franchised outlet to provide more individual assistance?
The level of training you need depends on your own business experience and knowledge of the franchiser's goods and services. Keep in mind that a primary reason for investing in the franchise, as opposed to starting your own business, is training and assistance. If you have doubts that the training might be insufficient to handle day-to-day business operations, consider another franchise opportunity more suited to your background.
