If you are thinking about owning a franchise then there are some things that you must think about before starting out on the journey itself. It would actually be best to consider what’s all involved with owning a franchise of a company before you actually contact the company you’ll be working with because there may be a lot of hidden rules and regulations involved that it may not even be worth it in the first place. Nevertheless, though, if you are set in stone about wanting to purchase a franchise of a company name then there are definitely some issues that must be cleared with the company before you sign into any sort of agreement!
The Fees
The first and foremost issue that you’ll probably want to take care of when entering into any franchise agreement is what fees you’ll be paying. Most companies require that a franchise owner pay an initial fee to be able use the company’s name and reputation whenever they want, but there are also some other fees that they must pay as well. For example, what is usually required is the franchise owners must pay a percentage of their profit to the company itself in return for being a franchise. Even though this percentage may only be 1-2%, it still could take a big chunk out of the profits. What you may want to get in writing is exactly how much you’ll pay to the company, whether it will be a percentage of the gross or net profits, and whether or not any fees will be required the first year considering that many businesses do not even turn a profit until the second or third year!
Renewal Agreements
When signing into a contract with a company for a franchise one of the things you may be required to agree upon is exactly how long that contract will be and how long subsequent contracts will also be. Most companies require that a franchise owner sign a contract for at least 10-15 year agreement, but then make subsequent contracts half of the duration that the first one is signed for. However, you may also want to know what exactly will happen if you somehow breach the contract and bankrupt the franchise before the contract is up. There may be hefty fines and fees involved, but getting all of the specifics in writing is the best route any franchise owner can take!
Location
One important issue with franchises and all company branches is the location of each one. Many companies have stipulations that are set so that no company branch can be in the way, or in a physical location that is close to another of the same branch. This rule of thumb probably also goes for franchise businesses, but this is an issue that you’ll want to discuss as well!
There are plenty of other things that you must discuss with the company headquarters itself before jumping on any bandwagon or riding on cloud nine! Securing your franchise is very important and making sure you know all the rules and regulations goes along with that!