Want To Buy A Franchise? Don’t Forget To Consult An Attorney!

Thinking about buying a new business or franchise? Then Caveat Emptor! The best way to protect yourself from stumbling into a bad deal is to carefully research your new business niche and consult a knowledgeable franchise attorney. Buyer beware, often considered a consumer warning, applies just as strongly to those thinking of buying a business. In the world of franchising, federal law has established disclosure rules to help people make wise choices. Still, it pays to consult an attorney that specializes in franchising. Of course, any franchise coach or attorney will advise prospective franchisees first to read the franchise disclosure document (FDD), which the law requires be written in standard English, so it can easily be understood by the non-lawyer. You still need a lawyer who specializes in franchises to review the franchise agreement or contract to make sure your interests are protected. Since experienced franchise lawyers know firsthand where franchisees get into legal difficulty most often, they can help you avoid the pitfalls that may exist in some franchise agreements. Most of the items in the FDD are incorporated in the franchise agreement, but an attorney can help you review the first four items, which provide background on the business and its senior executives, most particularly whether they’ve been involved in previous litigation or bankruptcy. And while there are costs involved, you can find an attorney who will provide these services for a flat fee. You should consider it part of your cost of getting into your own business. “I get phone calls daily from people who did not consult an attorney upfront,” said Nancy Lanard, a Philadelphia attorney who specializes in franchise law and works with clients across the country. “It’s much harder at that point.”

Before buying a franchise, be sure to review this checklist:

1. Review Franchise Agreement

Five or 10 years ago, most franchise agreements were completely non-negotiable, Lanard said, but now she negotiates non-material changes to most franchise agreements to protect the interests of the franchisee. Franchise companies are reluctant to negotiate any material changes for an individual franchisee because it would require them to revise their franchise disclosure document, an expensive proposition, she added. In her review of the contract, Lanard looks for issues that might create undue financial burdens on the franchisee, including how notice on default is handled and remedies applied.

2. Check Trademark Registration

Since the trademark is “the cornerstone of what they’re buying,” Lanard’s firm checks the trademark registration to make sure another firm isn’t operating under the same trademark in the designated territory — not an unknown occurrence.

3. Set Up A Legal Entity

Lanard strongly advises franchisees to set up a legal entity before signing any agreement with a franchise company to protect themselves from third party claims. Each location should be a separate entity, she added. Her firm charges a separate flat fee for this service.

4. Negotiate A Lease

“A lease can make or break a franchise,” Lanard said. Good franchisors should offer help finding a good location. They might have demographic studies and a great relationship with local brokers. They also can evaluate the lease from a business perspective, help negotiate good business terms, favorable rent, build-out costs, renewal terms, and so on. “Leases are highly negotiable,” Lanard said. A lawyer can protect the franchisee from onerous costs that landlords may try to impose, and a good lease can save a lot of money over the long term. A separate flat fee is charged for this service.

5. Protect Territory

Disputes over territory are “probably the No. 1 litigated area of franchising,” Lanard said. A good franchise attorney will make sure that the language in the agreement regarding territory affords the franchisee an actual separate, exclusive territory. A cautionary tale is a franchise that set territory based on zip code, which allowed franchisees to open across the street from one another — not a great way to stay in business.

6. Generally Good Advice

Likely topping this list will be for prospective franchisees to carefully study the fees and other costs — items five to seven in the FDD — required to set up a franchise. Take the most conservative approach since many businesses fail as a result of having insufficient capital to sustain the business until it can operate in the black. Good research cannot be over emphasized. Lanard tells a story of a woman who phoned, excited about purchasing the franchise of her dreams in the automotive sector, a franchise she had aspired to operating since she was a little girl. While she wanted Lanard to review the franchise documents for her, Lanard suggested she interview franchisees to see if they were satisfied with the franchisor’s support and training. When the woman called back, she reported that all the franchisees she spoke to were unhappy and wished they had never bought into the franchise company at all. Better to face this type of disappointment than the losses that can accrue as a result of signing a bad contract and trying to to fix it later. Ready to make your dream of becoming an entrepreneur come true?

Get your free evaluation today!

Contact Dan Citrenbaum to help you create the career you’ve always wanted. Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484)278-4589.

Love Has NOTHING To Do With Starting A Business

You fell in love with a little business years ago and have scrimped and saved to open one of your own. Now you’re this close to following your dream. Are you thinking of starting a business? As an expert in start-ups, let me just say whoa! To succeed with a new business, you require hard facts. And while it’s good to have a strong interest in the business, let reason overrule passion. It’s better to know the business side. Ask yourself, have you done your research? What do you know about the business? The market? Costs to operate? If you can’t answer these questions, you’re not ready to plunk down your money, or you risk losing it all. The better your preparation, the lower your risk. And the best way to get the facts about a business is with a franchise, which has dozens of owners, perfecting and improving the system along the way. If you’re keen on innovating your own unique business, there’s still a lot you can do to prepare. Get as much expert advice as possible and write a realistic business plan, which means allowing enough time to get everything up and running. Since you may be reinventing your systems as you go, be prepared for setbacks and be flexible enough to try new ideas. With a franchise, your very best resources are the franchisees currently operating all around the country. With any established franchise, you should find dozens of owners willing to talk to you. Just be sensitive to their time constraints and prepare your questions ahead of time. Talk to as many as possible.

10 Questions To Ask Franchisees

  1. Does this franchise have the potential to earn in the six figures?
  2. What made you choose this franchise?
  3. How long have you had the business?
  4. What is your background?
  5. Is the training and ongoing support sufficient?
  6. How long did it take you to reach break-even?
  7. How difficult is it to find good employees?
  8. How would you rate your relationship with the franchisor?
  9. What is the most important thing to know when buying this franchise.
  10. Would you buy this franchise again?

As your interviews progress, allow the conversation to flow, so if a franchisee says something particularly intriguing, go off script and ask a follow-up. For answers to specific questions regarding your costs for such things as marketing, merchandise, uniforms, and so on, you can turn to the franchise disclosure document, which you can get from the franchisor. Once you have answers to these questions you’re ready to start on your path to becoming a successful entrepreneur. You might learn that the business of your dreams is actually a very poor risk. The best entrepreneurs find profitable niches in which their businesses can flourish. So, is starting a business in your best interest?

Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today! Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a business coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-4589.

Learn what you need to succeed before you start your business

It seems every time you look at the business bestsellers list, there’s a new book for how to get rich quick, become a successful entrepreneur or take control of your own life.

We all seem to be searching for some version of the same thing: a chance to reach your potential in a career where you’re in control. For most of us, the idea of starting a business of one’s own inspires more fear than excitement, and the incipient desire remains an unfulfilled dream.

Yet, there is a great way to go into business for yourself without all the unknowns. That is with a good franchise, which comes with a tried-and-true system, as well as training and support for you and your staff to help you get across the finish line to smooth operations and profitability.

Before you sign any contracts, you have the ability to know exactly how much money you’ll need and what you’ll be getting for your money. That’s because franchise companies are required by federal law to disclose a virtual guidebook to their product in the form of a franchise disclosure document (FDD).

Not all franchises are created equal. Some are better than others, and you have to delve deeply to find out the truth of what they’re offering and how their promises match reality. So rather than rely on some cursory preconceptions you may have about a well-known brand, commit to doing a thorough due diligence on any business you seriously consider.

What you need to know:

  • The franchisor’s track record

Do an Internet search. You can find history of litigation, bankruptcy and information about their top executives in the FDD. (Items 1-4). You want a company in good standing that can stand behind you all along the way.

  • The costs

You should get a very good picture of all your startup costs, from the initial franchise fee through the cost of setting up your office/store, ongoing marketing and any ancillary costs like insurance and legal fees.

  • Details about the franchise system. How does it work? Is it easy to follow?

Franchisees are your best source for answers to these questions. The franchisor can tell you how it’s supposed to work, but the franchisees will tell you if it’s working. Find a list of franchisees in the FDD.

  • The nuts and bolts of what it takes to run the business

What skills are required? What experience may be helpful? What is the day-to-day life of the owner like? Does this suit you?

  • Do you like the management staff?

You need to have a good rapport with the people you’ll be dealing with on a regular basis. Do you feel comfortable talking to them? Are they receptive to your questions, concerns, etc? Do you trust them? You should have multiple conversations with key personnel on the phone and in person before you sign any contracts.

  • Is the franchisor’s training program and support sufficient?

This is critical information, especially if you’re entering a business in which you have little experience — which is the beauty of a franchise. You can change your careers and try something different. So make sure the training and support are up to par by checking in with franchisees.

  • Would franchisees buy their business again?

This question seems the ultimate test of a franchise’s merit. Don’t forget to ask this question of franchisees.

Whether you start a business from scratch or buy a franchise, the decision should be preceded by a deliberate methodical process of review. You can be sure with the huge array of franchises available, you can find one that suits your needs.  And when you make a good match to a franchise with a great record of success, you can start your new business with the wind at your back.

Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today!

Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a franchise coach, Dan brings years of experience helping people select and buy a franchise or existing business.

Dan spent 27 years as a successful entrepreneur and coach.  In 2010 he started the next stage of his career – he bought a franchise. And what does Dan say about his decision to buy a franchise?  He’ll tell you “It’s the best business decision I ever made.”  You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-4589.

© Dan Citrenbaum 2024

Want To Start A Business But Scared To Take The Leap? Consider A Franchise!

How many of us spend hours daydreaming up ways to start a new career to rid ourselves of a boss and the rest of the annoyances of the humdrum 9-to-5 existence? More than half of American adults want a new career or to start their own business, according to CreativeLive’s inaugural Creative Jobs Report. Surely, it’s not surprising that people have a deep yearning to express their creative selves. According to the Small Business Administration, 63% of net new private sector jobs come from small businesses. Just over 400,000 new businesses are started each year, according to the SBA. The obstacles can seem daunting, especially when considering all the responsibilities you may have picked up along the way, like a mortgage, children, or even aging parents. While it may sound risky, there is a great way to get started that lowers your risk and comes with a complete toolbox to get you past the start-up phase. That is a franchise. The advantage of a franchise is it comes with a time-tested system as well as a network of franchisees already operating the business who can tell you how the company’s promises pan out in the field. All it takes is the decision to commit the time to a little research to help you find a business that works for you.

5 Easy Steps To Select A Franchise That Works For You:

Assess Your Skills And Experience

Make a list of all the skills you’ve acquired in life, as well as in business. Think about whether you’re good at managing people, sales, organization, and so on. Remember many skills are transferable across businesses.

Research The Market

Read the business section of your local paper, as well as business specific magazines and learn where opportunities abound. What do the economic indicators show? Is real estate booming or on a downward cycle in your region? Maybe your area needs more senior care resources.

Contact A Franchise Coach

A good coach, whose services are free, can help you narrow down your selection to franchises that are fully vetted and offer the best opportunities for success.

Talk To Franchisors And Franchisees

After you narrow down your search, contact a few targeted franchisors who will provide you with a franchise disclosure document, which includes their financial history, as well as franchisees’ costs and other operating essentials. You will also find a list of franchisees, who are your best resource. Talk to as many as possible to learn how the system has worked for them.

Consult A Franchise Attorney And Franchise Accountant

Before signing any contracts, you should plan to pay for expert advise from these folks. They will examine the fine print to help you avoid potential pitfalls and maximize your chance for success. Making a good selection is critical to get you the career you crave for the long term. Solid research will put you on the road to success.

Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today! Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a business coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-4589.

Starting A Business: The Best Way To Reach Your Full Potential!

Everybody knows the job market is a bear, which is why lots of people decide to stay put in go-nowhere jobs. Better the devil you know is how the thinking goes. But is that really true? For women, a number of studies now support what many strongly suspected — that real barriers exist that slow or prevent women from advancing into the upper echelons of corporate America— the places where long-term strategic decisions get made, you know, the power circle. While we’ve seen some well known examples of women breaking through to lead big corporations, think Kraft, General Motors or Yahoo. Many more are left by the wayside and told to “lean in.” Nothing can be quite as demoralizing as not receiving your due advancement or compensation based on the work you perform. A recent study showed that women are underrepresented at all levels of American corporations; they’re less likely to advance than men and face more barriers to senior leadership. The 2015 study by McKinsey and LeanIn.org showed that at the current rate of progress, it would take a century for women to achieve gender parity in the executive suite. The truth is that for many people, the very best way to test your mettle is to start a business of your own. By taking the reins for yourself, you can see how high your hard work and ingenuity can take you. The good news is you don’t have to invent the wheel to make a go of it. There’s a perfectly wonderful time-tested method for starting out on your own, that is, with a good franchise. Instead of fighting ingrained, systematic conditions that might repress or even crush your growth, you can learn from a network of experts and backroom expertise and grow with a franchise business. The opportunities go way beyond fast food and cars. Lots of great franchises are thriving in business services that tap expertise acquired in corporate America. I tell my clients that a six-figure income is within reach and the upside can be considerably higher. The most important part of the entire process comes before you sign any contract and put up your sign. The key is to make a selection to match your expertise and skills and find a good franchise operation that can help get you where you want to go. This is where talking to a franchise coach or two is well worth your while. They’ve already done significant vetting and can help steer you toward operations that help new franchisees succeed and away from those that exist merely to milk their franchisees dry. Sometimes, it seems these clunkers get all the press, but lots of good franchisees are growing their earnings and achieving the work-life balance everyone craves. In fact, jobs in the franchise sector are growing faster than in the economy overall. So take charge of your career and start investigating starting a business today.

Ready to make your dream of becoming an entrepreneur come true? Get your free evaluation today! Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a business coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-4589.

Starting a new business? How to know exactly what you’re getting into – 5 easy steps to help you succeed

You’ve decided to make a break from corporate America, flex your creative muscles for your own bottom line for a change, only you’re concerned about the risk of starting your own business. Sound familiar?

No worries. There’s a great way to strike out on your own and get a new career while minimizing your risk…a way to learn everything you need to know to succeed, and learn it from people who have walked the very same path. That is to pair up with a well-run franchise operation.

The trick is making the right choice to suit your own unique set of interests and skills. The good news is all the information is readily available to help you select just the right business for you.

And once you do, a franchise operation offers a great network of support, plus a treasure trove of statistics and operating history that will give you a leg up in the marketplace.

By contrast, when you start an independent business, you must invent your concept and innovate your own marketing, inventory and accounting controls and countless other procedures from scratch, some ahead of time, and, inevitably, some on the fly as you go along, which will likely significantly impact your bottom line as you get started and optimize your systems.

With a franchise, many of those risky variables disappear since the franchise company has already figured out a system that works.

To help you make the best selection, we suggest consulting a franchise coach, who can help steer you toward reputable franchise companies. Of course, like everything else associated with your own business, the responsibility lies with you to do your due diligence before signing your name to any dotted lines.

We suggest you start with these five steps to narrow down your franchise search and maximize your success with your new business:

Conduct a personal inventory

Write a list of your professional and personal skills. Then write a wish list of the types of businesses you would like to operate and the types of skills necessary to run these businesses. See where they intersect.

Research possible franchises

Check the website of the International Franchise Association for a comprehensive listing of franchises that suit your personal profile. Then go a little deeper by Googling them.

Zero in on a few franchises

Request a copy of the Franchise Disclosure Document, required by federal law, for your top two or three franchises and read through these. Look for details about the franchisor’s background, initial and ongoing costs, litigation history, plus information about the types of training and support they offer, as well as their method for advertising, including who pays for what.

Interview existing franchisees

Learn about the types of support offered by the franchise companies. You want to find out what it takes to succeed with each particular franchise.

Interview former franchisees

Learn why things didn’t work out for them. You might get an earful about the franchise company’s shortcomings, or you might hear the franchisee wasn’t really cut out for this type of business.

The knowledge you gain by going through this research process is indispensable to you in whatever business you start. As you’ve likely heard before, success happens where opportunity meets preparation. And your research is critical to your preparation.

Ready to make your dream of becoming an entrepreneur come true?

Get your free evaluation today!

Contact Dan Citrenbaum to help you create the career you’ve always wanted. As a franchise coach, Dan brings years of experience helping people select and buy a franchise or existing business. You can reach Dan at dcitrenbaum@gmail.com or at (484) 278-4589.

© Dan Citrenbaum 2024