Most entrepreneurs spend years dreaming of being their own boss and escaping the grind of the 9-to-5 life. The problem for many, though, is that they don’t have an innovation or unique skill around which to launch a new business, but they still crave the small business lifestyle.
Buying a franchise is an attractive alternative to forming your own company if what you’re looking for is the freedom and excitement of running a business of your own. But before you get ahead of yourself, it’s important to understand what’s involved in buying a franchise – it’s a little more complicated than just finding a franchise chain you like and forking over the cash.
Purchasing a franchise is a big decision, and not one you should take lightly. You need to be sure the franchise you’re buying is the right one for you and that it fits with your strategic business goals. After all, you’re creating a long-term business relationship with the franchisor, so it’s crucial to do your homework before diving in.
Step 1. Find the Right Franchise for You
Just because you’ve fallen in love with a particular product or service, that doesn’t mean you should necessarily jump into buying their franchise. Whatever franchise you ultimately buy needs to be the right fit financially and entail a day-to-day work life that fits with both your business goals and personal obligations. Before deciding to pursue a specific franchise, you should review the various franchises that are currently available and make sure you’ve chosen the one that’s the best fit for you. There are many online resources that will help you explore your options.
Step 2. Due Diligence and the Franchise Disclosure Document
As with any business deal, it’s important to do your homework before you commit to anything. Get to know the ins and outs of the franchise you’re considering – the company history, how the franchises are run, what they’ll expect from you, and what their financial condition is, both now and as projected down the road. A big part of your due diligence will be reviewing the Franchise Disclosure Document, which is a formal offering document you’ll receive from the franchisor that should cover all these issues and much more. Even if it seems long and a bit dry, be sure to read it cover to cover.
Step 3. Discovery Day
The franchisor will invite you to a day-long event known as Discovery Day, where you’ll get to meet them face-to-face at their headquarters. Part sales pitch and part job interview, Discovery Day is a chance for you and the franchisor to get a sense of whether you’re a good fit to work together. It’s also a prime opportunity for you to get a feel for the franchisor’s business style, corporate culture, and internal policies, which are huge factors in the your ultimate decision to go forward with the franchise.
Step 4. Signing the Franchise Agreement
Assuming all goes well at Discovery Day, the franchisor will send you the official Franchise Agreement shortly after your visit. If you haven’t been consulting an attorney up to this point, now’s the time to do so. The Franchise Agreement is what governs both your legal rights as an owner and the rules you need to follow in opening and running your franchise. A business attorney experienced with the ins and outs of franchise law can guide you through the process and make sure everything looks right with the terms of your deal. You should never sign anything until you’re 100% comfortable.
Once you sign the Franchise Agreement and hand over your money, you’re the proud owner of your franchise, and can turn your attention to getting your new business up and running. You’re now officially your own boss – enjoy it!
Legal Guidance In Building Your Franchise
At The Gouchev Law Firm in New York, we work with businesses of all sizes, including start-ups and franchise businesses. Call us at (212) 537-9209 or schedule a free strategy session today to see what The Gouchev Law Firm can do for your business.