Franchises

Some issues to consider:

  1. Review of the Agreement. Is this a large existing business with a valuable growing brand and a developing public profile and with customers ? or will you have to find customers yourself and grow the business from scratch.
  2. Size of the exclusive territory and how new franchisees in the future may impact on the business.
  3. Ability of the Franchisor to promote the brand and push for the success of the franchise. How well is the franchise going to be run?
  4. Costs : initial purchase price and ongoing fees. Have you taken accounting advice and reviewed the Franchisors projections for revenue creation in the territory.
  5. How long is the franchise term and any renewals. Right to renew and at what cost ? What if the Franchisor sells out to a new company. Are you protected for the future?
  6. Ability to exit the business and get your money back or more. Transfer fees and legal costs in processing a sale.
  7. Sales targets. Are they realistic and obtainable. Have you spoken to other franchisees about their view of the business.
  8. Review any applicable lease documents for premises. Requirements of the Franchisor to approve lease premises.
  9. Requirements to purchase stock and pricing.
  10. Restraint of trade should you exit the business.