International Law

10 Things I Know About Buying a Franchise

Mark Dubinsky, Mark Dubinsky, President of Dunkin Donuts Independent Franchise Owners, (DDIFO), which represents more than 1,700 member franchisee owners in 12 states, has a nice post about 10 things about buying a franchise.

I am going to comment on his top four. But do read the entire article.

1. Listen To Your Heart

Prospective franchisees must understand the business reasons why they should become a franchisee.

You are not buying a job, despite what you may think. You have to understand and believe that you bring something valuable to the local operating scene.

2. Money In The Bank Make sure you have sufficient capital to meet all of your current and future obligations.

Don't be fooled by the disclosures in the UFOC about 3 month operating capital estimates. These are not realistic and cannot be relied upon.

3. Business Reference

Speak to the independent franchisee organization(s) (if any) and try to get any remaining questions answered.

Starting in July, 2008 any independent franchisee association will have to be listed in the FDD. Contact them and listen to what the are saying.

4. Legal Reference

Understand the details and the quantity of any litigation between the franchisor and its franchisees.

It is important to get a sense of how the franchisor settles its disputes - with a hammer or with business reason.

Full post as published by Misleading Advertising Law on May 27, 2008 (boomark / email).