I went to a fascinating class yesterday about franchise agreements. Have you ever read one of these things? Oh my! If you've ever considered investing in a franchise, rule # 1 is: make sure you consult an attorney first!
Most people associate franchises with fast food enterprises, but franchises can be any type of business. Many children's day cares, gyms, chain shops and more are owned by franchisees. What exactly is a franchise?
In a very general sense, A franchise is a license to operate a business developed by someone else. The business is already developed in terms of the products and systems and hopefully, brand recognition. A franchisor has specific investment requirements for new franchisees and many times a particular net worth requirement. The franchisee then obtains documents outlining all of the regulations, fees, royalties and other requirements when opening a franchise. Many of these documents are over 100 pages long and contain very specific details about how the business is to be run by the franchisee. Before agreeing to buy in, make sure you have an attorney thoroughly review the document and explain any terms you don't understand. It's a great way to open a business with much of the mystery removed, but make sure you completely understand the fees and obligations involved.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way.