If you are considering the purchase of a franchise – that is you want to start a business in New Jersey and you are considering teaming up with a franchise system – then it is important to understand what franchising is all about‚ the obligations that you will be undertaking and the rights that you will be acquiring. The following is a brief summary of some important factors but also below are links to our complimentary Franchisee University Program where you will learn even more.
What is Franchising All About?
Well franchising – when done correctly (i.e.‚ a match is made between the right franchisor and the right franchisee) – is all about leverage. The franchisor takes what has worked for him or her in having previously established a successful business and brand and the franchisee invests his or her capital to duplicate the franchisor's business model and "leverage" the franchisors "know-how"‚ brand and success. So that is what franchising should be all about – leveraging a business model that has been proven to work.
What Do You Need to Know About Before Buying a Franchise?
Having first understod that franchising is all about leveraging what works‚ the second thing that you need to know (as a prospective franchise buyer) is that there is tremendous disparity between franchisors and franchise systems. Like everything else in life there are good franchisors and there are bad franchisors. There are good franchise systems and there are bad franchise systems. Many times size doesnt matter and so in certain circumstances a start-up franchise system "may" be better for you than an older franchise system.
The point is that before you sign any franchise agreement or select a particular franchise you must look below the surface. Yes‚ you like the franchisors product or service and the franchisor may have a nice trademark but that is not enough – you must thoroughly evaluate the business and legal aspects of your potential franchise investment. Some of the more basic or preliminary factors to consider‚ include:
- Whether or not the franchise system successful – for its franchisees?
- Whether or not the franchisor has good track record of supporting its franchisees?
- The amount of your estimated initial investment?
- Whether or not you have adequately accounted for additional reserve capital that you may need?
- The scope and size of your protected territory?
- Your weekly‚ monthly and annual royalty and advertising obligations?
- Your ability to renew your franchise and possibly expand?
There are many more factors that should be considered.
Learn More: Get the Complimentary Book and Visit Franchisee University
To learn more about the right steps to take before buying a franchise in New Jersey: