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97676508 SBA Franchising Strategy

97676508 SBA Franchising Strategy

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Published by: eaharri on Jun 21, 2013
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Franchising Strategy
You need a strategy before investing in a franchise. Doing your homework about thefranchise first will help you gain a solid understanding of what to expect as well as therisks that could be involved.
Be a Detective
In addition to the routine investigation that should be conducted prior to any business purchase, you should be able to contact other franchisees before deciding to invest. Youcan also obtain a Uniform Franchise Offering Circular (UFOC), which contains vitaldetails about the franchise's legal, financial, and personnel history, before you sign acontract.
Know What You're Getting Into
Before entering into any contract as a franchisee, you should make sure you will have theright to:
 
Use the franchise name and trademark 
 
Receive training and management assistance from the franchiser 
 
Use the franchiser's expertise in marketing, advertising, facility design, layouts,displays and fixtures
 
Do business in an area protected from other competing franchiseesIn some cases, you may negotiate to have the franchiser help with several factors criticalto your business operations:
 
Obtain building permits
 
Purchase or lease equipment, signs and supplies
 
Construct or remodel the business premises
Watch Out for Possible Pitfalls
1
 
The contract between the two parties usually benefits the franchiser far more than thefranchisee. The franchisee is generally subject to meeting sales quotas and is required to purchase equipment, supplies and inventory exclusively from the franchiser.As a franchisee, the franchiser often has the right to terminate your business if it fails tooperate according to the agreement, becomes delinquent on royalties, or violates other contract specifications.
Seek Professional Help
The tax rules surrounding franchises are often complex, and an attorney, preferably aspecialist in franchise law, should assist you to evaluate the franchise package and taxconsiderations.An accountant may be needed to determine the full costs of purchasing and operating the business as well as to assess the potential profit to the franchisee.
Get More Information
If you're considering buying a franchise, you should take advantage of the manyresources that are available to help you develop a your business strategy.
 
Franchise and Business Opportunity Rule: Buyers' GuideOffers a guide to the Federal Trade Commission's (FTC) Franchise and BusinessOpportunity Rule, which requires franchise and business opportunity sellers to give youspecific information for making an informed decision.
 
Franchise and Business Opportunity Rule: FAQs for BuyersLists most frequently asked questions and answers about franchise and businessopportunities, including information on how to get a pre-sale disclosure document and legal assistance.In addition, it's important to know which rules apply to the company that is selling youthe franchise. The more you know about this company's requirements, the better informed you are when evaluating its opportunities.The five most frequently asked questions about franchise opportunities are:1.
 
Where can I get a company's pre-sale disclosure document?2.
 
How can I find out about complaints against a company?3.
 
How can I file a complaint against a company?4.
 
How do I know what must be included in a franchise disclosure document?5.
 
How can I find a lawyer who specializes in franchising?2
 
1. Where can I get a company's pre-sale disclosure document?
The Franchise Rule requires franchise sellers to provide to prospective purchasers with aFranchise Disclosure Document. The FTC does not require filings of these documents, sowe are unable to provide copies to consumers. A total of 13 states keep franchise offeringcirculars on file. Most states provide copies of these disclosures, usually by allowingvisitors to their offices by appointment to review or copy the documents.A few private companies may make franchise disclosure documents filed in one or morestates available for a fee. The FTC doesn’t support or endorse these companies:
FRANDATA Corporation
 1665 North Fort Meyer Dr., Suite 410Arlington, VA 22209(703) 740-4707www.frandata.com
FranchiseHelp.com
154 Grand St. New York, NY 10013(888) 491-3726www.franchisehelp.com
Franchise-Insider.com
 745 Campbell Way,Herndon, Va 20170(877) 674-6677www.franchise-insider.comIn addition, two non-commercial services make Franchise Disclosure Documents filed inCalifornia available on line without charge:
Cal-EASI
(Documents not word-searchable)California Department of Corporations1515 K Street, Suite 200Sacramento, CA 95814-4052866 ASK-CORPhttp://www.corp.ca.gov/CalEASI/caleasi.asp 
OpenFran - The Franchise Openness Project
(Documents word searchable)PO Box 25514Scottsdale, AZ 85255480-264-0050http://www.openfran.org3

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