Franchising has a longer history than many people may imagine but there have been several defining moments during its history. One of the biggest events occurred on October 21, 1979 when the Federal Trade Commission (FTC) introduced the Franchise Rule. This was designed to protect franchisees because it asserted that all US operational franchisors were legally obliged to fully disclose details that all potential franchisees should know before committing to investment.
As such, it enforced FTC standards to ensure that all disclosures contained uniform information that has been prepared to meet the legal criteria. One of the main requirements of this law ensured that there has to be evidence to support any financial details given. This in turn assures all potential franchisees that there is profit to be made and make them fully aware of any pitfalls.
More specifically, the Franchise Rule requires the following information to be disclosed by all franchisors:
(a) The franchisor must declare its affiliates, directors, officers, management and individuals responsible for all areas of the business, such as training, support, and franchising information.
(b) The franchisor must declare whether it or any of its officers, management, and directors have ever been bankrupt or faced lawsuits in the past, even those from before the individual in question joined the business.
(c) The exact amount you are expected to pay in franchise fees and various other associated charges must be disclosed. This includes all immediate and ongoing payments after the franchise contract is signed and the business has opened.
(d) Any and all restrictions on the quality of goods and services that you, as a franchisee, may use. This includes any purchase restrictions that may be in place.
(e) Any help and support that will be offered by the franchisor and any affiliates including financial support.
(f) All restrictions applicable to the goods and services you will be managing and selling, as well as any restrictions that you have to work with when dealing with customers.
(g) Any advantage or guarantees provided regarding the location and locality of the franchise.
(h) The franchise conditions under which your franchise may be terminated, sold on to another franchisee, repurchased, or modified.
(i) Franchisee training programs that are available and any fees associated with them.
(j) The involvement, if any, of celebrities or known figures in the public eye within the business, whether in advertising or behind the scenes.
(k) Site selection assistance that is offered by the franchisor.
(l) The number of present franchises, franchises projected for the future, franchises terminated or not to be renewed, and the number repurchased in the past.
(m) Full financial statement disclosure.
(n) How far you are expected to participate within the franchise operation after becoming a franchisee.
(o) Full disclosure of proof for earnings and profit claims made regarding other franchisees.
(p) Full names and addresses of franchisees that you can talk to.
All of the above legal considerations of franchising must be fully disclosed during initial contact with the representative of the franchise, whether that is a broker or the franchisor him or herself. As soon as the franchise opportunity is discussed, the legal considerations must be fully disclosed. The disclosure must be at least ten days prior to payment or to any franchise or related contract being signed. This pertains to the contract signing itself and also any financial statements changing hands.
The Federal Trade Commission does not require franchisors to register, but depending on the state your franchise may be in, it may have to register on a local level. The Uniform Franchise Circular Offering (UFOC) guidelines have been adopted by most states as a result of their strict disclosure requirements. However, you should never take it for granted that the franchise is registered or offers full disclosure, thus providing you with protection of any kind. You must research the franchisor fully before committing.
About the Author:
GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchises for sale. Sell your business for sale for free with no listing fees and zero commissions. We have 1000s of franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.
Category: Entrepreneurs
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Can’t Find A Job? Buy A Business!
Article Contributed by Ray Haiber
Having a tough time finding a job? Unfortunately that’s not surprising news due to the fact that this current recession has already to near double digit unemployment rates in some regions. Many of the hardest hit industries such as financial services and home construction face the prospect of an extended or permanent contraction that will force many workers to seek new careers as positions in those industries become eliminated or harder to replace.
One viable alternative that has always been available to workers who either want to leave the restrictions of the corporate world, or can‘t find a job in their industry because of tough economic times is to “buy a job”. How do you do that? By either finding and purchasing an existing small business, or starting a franchise.
Buy An Existing Business:
Business Brokerage Industry statistics indicate that your odds of success increase dramatically when you buy an established business as compared to launching a start up. This is particularly true in challenging economic times, and if the target business has been established for over 5 years and has a proven track record that can be validated via a thorough due diligence process.
What Type of Business?
Your basic goals should be to find a business that you will enjoy working in and growing, compliments some of your existing skill sets, and will also provide enough net income for you to make a comfortable living. Ideally the business should also generate enough income to allow you to cover any debt service you may have incurred if you financed a portion of the purchase price.
How To Find a Business: What’s the best way to find existing businesses for sale? The most efficient way to begin your search is via the Internet. There are quite a few online “Business For Sale” directories like bizbuysell.com that offer a large searchable database of existing small businesses broken down by categories like states and industries. When you see a business that strikes your interest you can then contact the owner or the Business Broker who represents the listing for more information. In most case you will be required to sign a confidentiality agreement and provide some basic financial qualifications before receiving a detailed business summary.
Another way to find an established business is to employ the services of a professional business broker in your local area. Many Business Brokers have access to listings that might not normally appear on a local MLS system, are kept in house, or have knowledge about new listings coming available soon that may fit your investment parameters. A good Broker can also show and help you indentify potential business matches that you may have not even considered. And in most cases Business Brokers working with buyers are paid on a commission basis with the fee paid by the Seller so you have no out of packet expenses. You can find a Business Broker in your local area by visiting: http://www.findabusinessbroker.com
Buy A Franchise
Another viable option to replace a lost job is to start a franchise business. The biggest advantage of buying a franchise opportunity is that it’s a lot less risky than starting a new business from scratch. Most established franchise concepts are proven business models that have a verifiable track record of success that generally can be easily validated during your investigation of the offering. Franchisers can also provide comprehensive training and support before and after you open your location. And keep in mind that one of the main reasons for the success of franchising as a business model is that Franchisers have a vested economic interest in your success in the form of royalty and other fees.
Find A Franchise
As with existing small businesses, the fastest and most convenient way to begin the process of finding a franchise is with an Internet connection. There are now dozens of franchise directories on line today that offer comprehensive listings of franchises available for sale, including information about investment levels, training, availability, and how to contact the franchise company for more details. These directories are also a good source for free information about the general process of buying a franchise business. You may want to visit A couple different directories such as franchiseopportunites.com, franchiseforsale.com, and azfranchises.com because not all of then will carry the same franchise opportunity listings.
Final Note: Always thoroughly investigate any franchise or business opportunity, obtain all appropriate disclosure documents available, and seek expert consultation prior to making any investment decisions.
About Author:
Ray Haiber has 10 years experience as a professional Arizona Business Broker and franchise sales consultant. View and research franchise opportunities for sale across the USA here.
For any individual looking to capitalize on franchising opportunities and owning a franchise business, there are several advantages to consider. Some of those you may be interested in are outlined below:
The Franchise Business Pros
· Having a brand behind you, whether it is locally or nationally famous, will save you a lot of time and money that would be needed to create your own brand or trademark. You will also attract customers immediately rather than having to advertise extensively.
· You will have an established business framework to work within, which dramatically reduces the risk associated with a startup business.
· You will already have tried and tested suppliers and services at your disposal, which will again save you the time and money associated with finding your own.
· You will receive ongoing support for sales and marketing throughout your franchise ownership. Franchisees often choose to tap into the help that is offered to them throughout their tenure via existing marketing and advertising assistance.
· Franchisees often get comprehensive financial assistance because banks are often more willing to lend money to well-known brands and names than business startups that are completely unknown to consumers. Franchisees may also have access to direct financial assistance from the franchisor.
· The risk of investing in a franchise is lower than it is for a regular business startup. An established concept is much more desirable because there is less risk.
· Continued development opportunities and research will be available. Franchisors tend to choose to tap into information concerning competition in the local area, seasonal goods, demand, and local attitudes.
· You will get business support from your franchisor, which will help to find you the best possible site and enable any construction work that needs to be done in addition to employee training and operational assistance.
· All business procedures and methods that you use will already be tried, tested, and proven to work.
· The quality and desirability of the franchisor products have been proven and come at a certain standard level that is well established.
· You will have the buying power of the franchisor and centralized purchasing at your fingertips, so costs may be reduced as a result of bulk buying savings that are handed down to the franchisee.
In addition to the pros of franchise businesses as outlined above, there are also others that you may want to consider. For example, expansion may come more easily with a franchise business and you may enhance your business interests with additional businesses, either within the franchise or outside of it. This is how dreams of riches become realities.
That is not to say that there are not cons and disadvantages associated with franchise businesses. A few of them are outlined below:
The Franchise Business Cons
· You may lose ultimate control of your business as a result of the established franchise standards that you have to run your business in accordance with. You may also find that you cannot implement your own ideas and initiatives.
· The level of royalties could be as much as 10% or more in select cases, which will of course affect your profits.
· You will have to pay an initial fee to buy into the franchise. It could be as little as $4,000 but may extend up to $50,000 so there is significant initial outlay.
· You will have to pay advertising fees to ensure that your business is recognized as existing in your current location. If the franchisor advertises poorly then your fees are wasted.
· You may have to buy a signage pack from your franchisor. Some franchisors insist on you buying their specific signage and so you may find it extremely expensive.
· If the franchisor gets into difficulties then so do you. As you effectively bear their name then you bear the brunt of a problem, including issues with suppliers.
In conclusion, although there are some disadvantages with having a franchise business, the positives far outweigh the negatives. The risks of failure are significantly reduced and so there are fewer problems than a brand new startup business. Of course, you should always ensure that the paperwork is in order, and you should complete your research and due diligence before committing because there are no guaranteed profits, and you would ultimately be responsible should the venture fail.
About the Author:
GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchises for sale. Sell your business for sale for free with no listing fees and zero commissions. We have 1000s of franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.
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Are You A Dreamer Or A Schemer?
Article Contributed by Avinash Patil
The world needs entrepreneurs more than at any other time in the last century and an online business guru has come up with a way for would-be business owners to test whether they are likely to be a success or failure.
Guy Kingston, a serial entrepreneur who successfully started one of the first private enterprise businesses in post-communist Russia, says the motivation behind starting a business is often the key to success.
Mr Kingston, whose Mind Your Own Business podcast provides free help and advice to business owners said: “Every entrepreneur is driven by their dream of what they want to achieve through business. By asking themselves a few simple questions they can work out what their motivation is and from that you can pretty well work out whether they are likely to be a success or not.
“Many people are really dreamers, who like the idea of running a business but can’t cope with reality. The ones who will succeed are schemers, who will do everything they can to ensure success.”
Mr Kingston, whose website www.myobpod.com features free written, audio and video advice for entrepreneurs with no sponsors attached, sets out the following check-list for would-be entrepreneurs to test out whether they are a dreamer or a schemer.
See which statement applies to your thoughts then see whether this is a dream or a scheme.
“I want to build a business so that I can employ lots of people and be a big boss.”
Guy’s verdict: Dreamer: “if empire building is your main motivation you will probably fail.Costs need to be kept tight in a growing business and the regulatory environment surrounding employing people makes them very expensive. Operate with as few people as possible and the empire will grow.”
“I’m really confident in my idea and my ability to make it work, but there’s more to it than that.”
Guy’s verdict. Schemer: “Positive thinking alone is not enough. Whereas you won’t succeed without it, it is not sufficient alone.”
“Running my own business will mean I will be able to have greater flexibility and time for myself and my family”
Guy’s verdict: Dreamer: “You have more time if you are employed by someone else. Of course you have to get the balance right but don’t see being an entrepreneur as a passport to more spare time.”
“I know I have skills that my employer doesn’t appreciate and I want to sell them direct to people”
Guy’s verdict: Schemer “Often the core of a good business comes from an individual’s talents. Just make sure that it is more than your nearest and dearest who think you are good.”
“I have certain abilities but if my business is really going to take off I’ll need to pick quite a few other people’s brains to bridge the gap.”
Guy’s verdict: Schemer: “The best entrepreneurs beg, steal and borrow ideas from everyone and then adjust them to their own situation. They also recognise early on that they aren’t good at everything.”
“I have inherited some money and I think the best way to use it is to buy a business that I can run.”
Guy’s verdict: dreamer “Buying a business is about a lot more than just having the money. Many successful businesses have disappeared very quickly once under new ownership.”
“My partner / best friend and I get on so well that we would be awesome in business together and we are going to come up with something between us that we can do together”
Guy’s verdict: dreamer “Running a business together puts a great strain on any relationship. Although it works well for many people there has to be more to substantiate going into business together than the fact you are great buddies or soul mates!”
“I want a mentor who’s been round the block a few times.”
Guy’s verdict. Schemer: “Just as you wouldn’t want a brain surgeon who’s never done brain surgery before, you don’t want a business advisor who hasn’t run a business of their own. Experience trumps qualifications and theories any day.”
“Everyone likes the items I produce as part of my hobby so I am going to pack in my job and do it commercially.”
Guy’s verdict. Dreamer: “Hobbies rarely turn into good viable businesses. Before making the leap it is important to check out every aspect of the business model.”
“Business is fairly simple. You just buy things in and then sell them at a cheaper price. That is the basis of my plan for trading”
Guy’s verdict. Dreamer: “This is someone who needs to do a lot more planning on things like stock levels and what the market will stand before venturing into being an entrepreneur.”
It’s easy to let things slip over the summer – after all the weather’s far too nice to be indoors organising your office! However, the reality is when you do settle back into working after a break unless your office is organised you spend more time looking for files, business cards, papers, than you do working.
It’s a lot of wasted time! Use my tips below and get your office schedule back on track.
1. Clear out your desk and files
Make way for those exciting new projects that have been put on the backburner over the summer. I recently did this and apart from getting rid of four grocery bags of papers, I felt much more motivated to start those projects that had been lurking for months! And it’s amazing what you come across too!
2. Set up a Resource Folder
Keep track of those all-important pieces of information that you come across daily. How? Create a Resource Folder:
:: on your PC — store all those downloaded documents and create a shortcut on your desktop so that you can easily access your information. Go one step further and create folders within your folder, each relating to a specific topic, i.e. industry news, marketing, accounting — decide what works best for your business!
:: in your Favourites Folder in your web browser — bookmark those web pages that you find useful so that you can easily access them again. Create subject specific folders within the main resource folder.
:: using a ring binder file — print out articles that you come across while surfing or any emails that you may need to refer to again; cut out useful magazine articles; store newsletters, circulars or magazines. In fact use your resource binder to store anything that you will want to keep and refer to again! Use divider cards so that you can easily access resources on a particular topic.
Or use a combination of all three for maximum efficiency!
3. Get back in touch with your clients and contacts
Now’s a good time to update your client and contact database. It’s easy to let things slip over the summer, so drop them a personal note or email and make sure that the information you currently have for them is up-to-date — and this will ensure that your information is accurate when you come to send those all-important Christmas greetings!
4. Get your website listed in as many places as possible!
Update your directory listings; get entered on new industry directories; check backlinks — set up a spreadsheet to keep track of all of this.
5. Get your finances organised
I know, it’s summer; you’d rather be outside enjoying the sunshine than inside organising your receipts. Now’s the time to drag out all those business receipts and get your bookkeeping system back on track!
Follow these simple tips and you’ll soon have your office schedule back on track!