By Franchise Law Team - Mohajerian Inc.
Owning your own business, or deciding
to can be the most important decision you will make. When owning
a business, including a franchise, there are many roles you will
have to fill on a daily basis: sales, marketing, human resources,
customer service, operations, quality assurance, legal and regulatory
compliance, and more. The challenges can be enormous and draining.
In principle, owning a franchise may
reduce the risk of never having performed these functions before.
The key to franchising is that the franchisor has developed a business
system that has been successful and can be duplicated by others.
The company's new franchisees will be trained and provided with
manuals that cover, in detail, the critical functions of the system.
Selecting the franchise itself is a
serious and lengthly process. There are so many franchise options
today that it can be difficult to determine which franchise system
is best for you. The following information can help you to determine
what considerations should be made in the preliminary selection
First, all potential franchisees need
to consider the capital investment they are able to make. What franchise
financing options do you have available if needed? Most franchisors
have capital requirements for all franchisees.
Second, all potential franchisees need
to consider their interests and seek franchise businesses that match
closely. For example, if you love to work with animals, people,
or cars - you should begin searching for franchise businesses that
match those categories. Chances of success are less likely if you
hate what you do. A franchise business is very demanding and can
consume alot of your energy - shouldn't this happen with a business
Once you have located a potential franchise,
after making an inquiry, you will be asked to complete a formal
franchise application. The franchise application can include credit
checks and background checks. If you meet the franchisors criteria,
the law requires the franchisor to provide a UFOC (Uniform Franchise
Offering Circular - a type of disclosure statement.
The UFOC provided to you, must
be reviewed very carefully. The UFOC will include detailed information
about the history of the franchise, key principals, financial statements,
franchise openings/closings/terminations, requirements, franchisee
contracts, and the franchise agreement. It is highly recommended
that you seek legal counsel for a review of the UFOC provided. The
UFOC will have a profound effect on every aspect of your business.
Have the UFOC reviewed by legal counsel to ensure your rights are
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