Healthy Fast Food Announces SBA Franchise Registry Listing Approval for U-SWIRL Yogurt Franchise

Some Franchise System “Characteristics” to Consider When Buying a Franchise

Franchise Failure: Figuring Out Who and What is to Blame?

• Encroachment - In and of itself encroachment is a very dangerous and serious issue for franchisees but in Ms. Reisman's situation she said "a competing Rita's opened five miles away".  The likelihood that a small quick service franchise, such as Rita's - a franchise that sells ice cream and ices, is very low.  Most people do not travel five miles for quick service franchises so five miles should be a far enough distance to not cause encroachment for this type of franchise.
  
• Time Consuming Promotions - While it may be true that promotions are time consuming there is an upside to promoting and marketing and that is it shows that your franchisor is interested in marketing your product to help generate business.  While the down side may be that it is time consuming to stand outside of local stores to hand out information about your franchise location there is always other ways to go about handing out the promotion papers  as Mr. Internicola suggests, such as hiring a few teenagers to help you out for the day. 
• Product Introductions - Product introductions can definitely put cause franchisees to have an excess of products that aren't very popular and when it is mandatory that you sell them (such as in Ms. Reisman's case where she has to have a new product for at least 24 days) it may result in you losing money on the not so popular products that are introduced.  While this does cost the franchisee money it should not be causing the franchise location to go under.  Also, there could also be a suggestion that the franchisor should do a royalty adjustment for products that do not sell much during the mandatory promotional period. 
  

Factors to Consider when Buying a Franchise

• Search new sources about the franchise opportunities and, specifically, the franchisors that you are considering;
• Find out if the franchise system you are considering is focused on the franchisee and a quality product and not just interested in a fast growing franchise with lack of support and resources for the franchisee;
• Speak with multiple franchisees in the franchise system ranging from franchisees that have been in the business for the past 3 to 12 months and also franchises who have went through a renewal cycle;
  
• Speak to a qualified franchise attorney and your CPA.

New York Franchising Seminar to Offer Insightful Information About Buying a Franchise

Purchasing a Closed Franchise Location: What you Should Consider to Make Sure your Franchise Location is Successful

Franchise lawyer Charles N. Internicola at the New York Franchise Law Blog discusses franchise opportunities involving the “potential re-opening of a previously failed franchise location”.  In the article Charles recommends that when considering these types of franchises that prospective franchisees:

• Understand Why the "Closed Location" Originally Failed - When considering the purchase of a franchise location that previously failed you will want to do your research and figure out why the location failed.  Do research and find out who was at fault and why.  Did the franchise location you are considering not succeed because of its location, the franchisor, the cost of rent, the cost of food/supplies or was it the franchisee who was to blame for the franchise locations closure.  All of these questions should be answered before you decide to move forward with considering the purchase of a closed franchise location.
• Your Investment Goes Far Beyond your Original Out of Pocket Expense - Often franchisors who are trying to offer a closed franchise location to a new prospective franchisee advertise the franchise location as being offered at a discounted start up cost.  Make sure that you fully evaluate the full situation and not just what the initial fee is.  Find out how much debt you will be incurring by purchasing the franchise that is being re-sold and how much your monthly charges will be.  If your monthly expenses are higher than the amount you will be generating in profits it is probably not worth buying the franchise location and you may want to consider continuing your search for the "right franchise" to purchase.
• Don't Just Jump In - Make sure you perform due diligence when considering the purchase of any franchise or business.  You never want to jump into a situation that you are not fully aware of.  Contact other franchisees from the franchise system you are considering purchasing and ask them any questions you may have.  Then, once you have based your decision to purchase the franchise on your due diligence, contact a franchise attorney to review your Franchise Disclosure Document (FDD) and your Franchise Agreement. 

Following the steps listed Charles Internicola's article will allow you to make an informed decision when you are considering the purchase of a franchise that previously closed and can be the difference between your franchise location succeeding or failing.

Franchise System Trend: Older Generation Seeks to Become First Time Franchise Purchasers

In a recent article “Older Operators make a Mark on Franchisees” by Deborah L. Cohen she reports that there is a new,  fast growing trend that is starting to take place in todays world of franchised systems that is comprised of people between the ages of 40 and 55.  In fact, according to a franchise research firm FRANdata about 46 percent of people who have attended franchise expositions recently have been in that age bracket. 

Deborah L. Cohen’s article has many examples of, how she describes, “older operators who are becoming more typical at franchise systems ranging from fast-food chain to corporate cleaning services and retail outlets”.  Most of the examples in her article are of those who are in the 40 to 55 age bracket and were not previously entrepreneurs, in fact, the they are mostly of workers that were recently laid off of their jobs due to downsizing when the economy took a turn for the worst.  They decided they were done with all of the mergers and layoffs and decided that they were going to invest their money in something where they could own their own business but not be on their own and they found that comfort in a franchise. 

While buying a franchise may be an option for you if you were recently laid off or if you just want to own a business there are many things you should consider before buying a franchise.   In my blog post “Can (or even Should) you Buy a Business or Franchise to Replace a Lost Job?” I discuss questions you should consider before deciding to purchase a franchise if you were recently laid off of work. 

Franchise Trends: Recruitment of Younger Franchisees

In her article “In With the New” Wall Street Journal reporter Jonnelle Marte reports on a subtle but growing trend focused on a franchise “youth movement” .  Ms. Marte identifies two “service and advertising  base d” franchisors (Valpak Direct Marketing Systems, Inc. and WSI) focused on the development of “young” franchisors. 

Jonnelle Marte describes in her article that "Last year, Valpak created the Entrepreneurship Award Program in an effort to recruit young people who could open new franchises or take over existing ones as owners prepare to retire. The potential franchisees sign on with the company as salespeople, and if they hit certain goals they get a discount on their franchise fee. Along the way, they get to know the business and the company gets a sense of how they perform".  

While there are many components and factors to be evaluated in the purchase of a franchise, without question, the training of a younger generation coupled with real training "could"  be a good thing and, quite possibly, a win-win situation.  However, if the undercurrent and motivation for this trend is just to expand the base of prospective franchisees and sell to a young and inexperienced demographic then this "trend" could prove to be destructive.  For an informative take on this potential hazard, read the Franchise King's take on this "trend" in his post "Why are Franchisors Starting to Target Younger Prospective Franchise Owners?". 

When Buying a Franchise you Must Give Serious Thought to "Restrictive Covenants"

Avoiding Fraud When Buying a Franchise