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Is Franchising worth the risk?

Posted by Carolyn Dufton on 8 September 2008

Franchising can be a risky game, but the real risk is on the part of The Franchisee who sometimes puts their house on the line to buy into a franchise.

It is absolutely essential that potential franchisees get the franchise business that they're considering buying into, thoroughly checked by both a lawyer and a franchising consultant. Lawyers look at the legal agreement and compliance issues and the franchising consultant looks at the operational implications and sometimes the figures.

Some potential franchisees are reluctant to pay out money for this initial vetting of documentation, but it could prove to be the best investment ever made. I have saved some potential franchisees their life savings by pointing out aspects of a franchise that needed attention drawing to them.

With Franchising documentation, it's not a case of taking it to your local conveyancing solicitor, it's a case of taking it to someone who thoroughly understands franchising. This person will protect your interests.

There are "mischief making franchise consultants" out there who enjoy  spoiling a sale for the sake of it.  Be sure to use a consultant who deals equally with Franchisors and you will be less likely to come across this sort of negative, pointless behaviour.

Remember, as a potential franchisee; you have to sign a written statement to say that you have received, read and had a reasonable opportunity to understand the code and the disclosure document. You will also need to sign a statement that states that you have sought independent legal, business or accounting advice or that you have been told that you should, but have decided not to. The ACCC advises all potential franchisees to get advice from a franchising expert. The Franchisor should provide you with these forms to sign.


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Author: Carolyn Dufton
About: Carolyn Dufton Dip. Bus (Franchising) heads the team as the owner and manager of franchisingplus. Carolyn has a wealth of small business experience, and many years of hands on franchising experience.
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Tags: Franchising

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