ABA Family Legal Guide

Forming and Operating a Small Business

Franchising and Buying a Business

Buying a Franchise

What steps should I take to increase the probability that I'll get a good franchise deal?

You should retain the services of a lawyer who concentrates on business start-ups or franchises. He or she can help in almost every step of the process. But you should do some legwork, too. It'll save you in legal fees, and you'll get a better sense of the business. You also should consult an accountant, who can help you assess the financial disclosures in the franchise offering circular.

Contact Other Franchise Owners

They can help you match disclosure statement information with their own experiences. Spend some time with them during the workday, to see the operation in action.

Ask what help they got from the company, and how it followed up on its promises. Did it give them the tools they needed to get the business up and running? Are they getting enough advertising and support for their royalty payments?

Ask about problems. Ask if they'd make the same investment again.

Be Skeptical of the Franchisor's Sales Presentation

A franchisor who has a legitimate offer does not need to use high-pressure tactics such as "Better hurry, another buyer wants this deal" or "Do this today because who knows how much it will cost tomorrow." Such language should raise a red flag. Remember, the FTC rule requires that the franchisormustwait ten days after giving you the required documents before you have to pay any money or sign any agreement. And while you're being skeptical, also disregard any franchisor's claims that the job will be easy. Success requires hard work.