Chapter 1 Lesson 4: The Franchise Purchasing Process
So, in the prior lessons we learned about the franchising basics and important franchise terms. In this lesson you will learn about the actual “franchising process”. That is, the step-by-step process that many current franchisees have followed or should have followed before buying a franchise and before signing a franchise agreement. So, if you have identified a franchise that you are very interested in, have spoken to the franchisor’s salespeople and have received some information from them, what’s next? Well, learn more in this video.
- You should have or will be receiving a large document called the Franchise Disclosure Document, also referred to as a FDD. The FDD contains information about the franchisor, franchise opportunity that you are buying, your rights as a franchisee and, most significantly, your obligations as a franchisee.
- The next step would be to work with a competent and experienced franchise lawyer. When you do this, you should be engaged in a dual track. That is, your should be evaluating the FDD and Franchise Agreement and he or she should be giving you some assignments. You will get some recommended steps that you should be taking to advance your due diligence (more about due diligence in Chapter 2) and your evaluation of the particular franchise opportunity.
- If there are red flags or the opportunity is not what it appears to be, then in that case, your best decision may to be to walk away from the transaction.
In Lesson 5 we discuss how long it typically takes to buy a franchise.