There are many benefits of buying a franchised business, especially when it comes to these two areas:
- Government regulations: The Federal Trade Commission (FTC) requires franchisors to disclose certain items before a franchise sale closes. The Franchise Disclosure Document, also known as the FDD, will help you during your due diligence before purchasing the franchise. Many states require additional items a franchisor must comply with to sell franchises in that particular state.
The FDD provides critical information and helps when evaluating the risk of buying the business. Items in the FDD include a list of all franchisees, lawsuits against the franchise, franchisees who have left the industry, and many more valuable pieces of information. Also, the FDD may disclose franchisees’ earnings. This disclosure isn’t required but is sometimes included.
- Relationship between the buyer and the seller: The franchisor provides a brand, a business model that is proven, training, and support. In exchange, the franchisee gives the franchisor a fee, then ongoing royalties. Franchisors do require franchisees to stick to their plan to protect their brand. This keeps the service or product standard across all franchisees.
Buying a business is a big deal! Starting from scratch may sound appealing to you so you can truly make all of the decisions. Franchising may seem too limiting to you. However, starting with instant brand recognition on day one, ongoing support and corporate-wide marketing are tough to ignore. Technology adjustments, service, product offerings improvements, and new training are part of a franchise. Also, imagine being a business owner and having an instant support group of other franchisees to talk to and learn from as you go.
It’s good to talk it over with someone who understands and has been in the industry. Schedule a no-cost call to discuss franchising and to see if it’s right for you: https://calendly.com/scottmilas/introcall