Franchisor and franchisee relationship pdf reader

A Consumer’s Guide to Buying a Franchise | Federal Trade Commission

franchisor and franchisee relationship pdf reader

This got me thinking about franchising and I have done quite a bit of reading on the Answer: A franchise is a business relationship governed by a contract or. when the franchisor-franchisee relationship should be deemed sufficient . Ct. App. ) (noting that the court had never dealt with vicarious liability in such a victoryawards.us() (on file with the. the impact of the EU rules on functioning of the franchising contract. It . reading. Mr De Jong (MEP) outlined the thematic content of individual.

Site Approval Many franchisors retain the right to approve sites for their outlets, and may not approve a site you select. Some franchisors conduct extensive site studies as part of the approval process and a site they approve may be more likely to attract customers. Design or Appearance Standards Franchisors may impose design or appearance standards to ensure a uniform look among their outlets. Some franchisors require periodic renovations or design changes; complying with these requirements may increase your costs.

A Consumer’s Guide to Buying a Franchise

Restrictions on Goods and Services You Sell Franchisors may restrict the goods and services you sell. For example, if you own a restaurant franchise, you may not be able to make any changes to your menu. If you own an automobile transmission repair franchise, you may not be able to perform other types of automotive work, like brake or electrical system repairs.

Restrictions on Method of Operation Franchisors may require that you operate in a particular way. They may dictate hours; pre-approve signs, employee uniforms and advertisements; or demand that you use certain accounting or bookkeeping procedures.

In some cases, a franchise advertising cooperative may require you to sell some goods or services at specific discounted prices, which may affect your profits.

Or, the franchisor may require that you buy supplies only from an approved supplier, even if you can buy similar goods elsewhere for less.

franchisor and franchisee relationship pdf reader

Restrictions on Sales Area A franchisor may limit your business to a specific location or sales territory. For example, the franchisor may have the right to offer the same goods or services in your sales area through its own website, catalogs, other retailers or competing outlets of a different company-owned franchise. Contractual Obligations Franchise contracts last only for the number of years stated in the contract.

Terminations A franchisor can end your franchise agreement for a variety of reasons, including your failure to pay royalties or abide by performance standards and sales restrictions.

Renewals Franchise agreements may run for as long as 20 years. Renewals are not automatic. For example, the franchisor may raise the royalty payments, impose new design standards and sales restrictions, or reduce your territory. Any of these changes may result in higher costs, reduced profits or more competition from company-owned outlets or other franchisees.

Is a Franchise Right for You? Before you invest in a particular franchise system, think about how much money you have to invest, your abilities and your goals. Your Investment How much money do you have to invest? How much money can you afford to lose? Are you purchasing the franchise alone or with partners? Do you need financing? Where will you get it? Do you have savings or additional income to live on until your franchise opens and, you hope, becomes profitable? Your Abilities Does the franchise require technical experience or special training or education — for example, auto repair, home and office decorating or tax preparation?

What special skills can you bring to this business? What experience do you have as a business owner or manager? Your Goals What are your reasons for buying a particular franchise? Do you need a specific minimum annual income?

Do you want to work in a particular field? Are you interested in retail sales or performing a service? How many hours can you work?

How many are you willing to work? Do you intend to operate the business yourself or hire a manager? Will franchise ownership be your main source of income or a supplement to your current income? Are you in this for the long term? Would you like to own several outlets? Are you willing to let the franchisor be your boss? Franchise Exposition Attending a franchise exposition allows you to see and compare a variety of franchise possibilities at one time. Before you attend, research the kind of franchise that may best suit your budget, experience and goals.

When you attend, visit several franchise exhibitors who deal with the type of industry that appeals to you. How many franchised outlets are there? What is the initial franchise fee?

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What are the additional start-up costs? Are there continuing royalty payments? How much are they? What management, technical and other support does the franchisor offer? What controls does the franchisor impose? How long has the franchisor been in business?

Exhibitors may offer you incentives to attend a promotional meeting to discuss the franchise in detail. These meetings can be another source of information and give you a chance to raise questions, but they may also expose you to high-pressure sales tactics. Be prepared to walk away from any franchise opportunity — and promotion — that does not fit your needs.

Typically, a broker reviews the amount of money you have to invest and then directs you to opportunities that match your interests and resources. A broker also may help you finish applications and the paperwork to complete the sale. Brokers often work for franchisors, and are paid only if a sale is made. What choices does the broker offer?

That may be true — or not. Ask how many franchisors the broker represents. A broker who represents only a few franchisors will give you limited suggestions. How does the broker select franchises? Some franchise brokers may claim they will suggest only those franchises that meet certain standards.

You may think this means that your risk is limited because the broker weeds out poor investments. In fact, some brokers represent any franchisor willing to pay them a commission for a sale.

Ask how the broker selects franchisors to represent. Ask to see the selection criteria and how many franchisors the broker has recently turned down.

The Economics of Franchising: Roger D. Blair: victoryawards.us: Books

How is the broker paid? Some brokers earn a flat fee regardless of the price of the franchise they sell. Others earn a commission based on the cost of the franchise. These brokers may steer you toward a more costly franchise to increase their commission. Ask who pays the broker and how the payment is calculated. Find out whether the broker earns a commission based on the cost of the franchise. If he or she does, consider whether the broker is suggesting a higher priced franchise in order to earn a larger commission.

Design or Appearance Standards Franchisors may impose design or appearance standards to ensure a uniform look among their outlets. Some franchisors require periodic renovations or design changes; complying with these requirements may increase your costs.

Restrictions on Goods and Services You Sell Franchisors may restrict the goods and services you sell. For example, if you own a restaurant franchise, you may not be able to make any changes to your menu.

If you own an automobile transmission repair franchise, you may not be able to perform other types of automotive work, like brake or electrical system repairs. Restrictions on Method of Operation Franchisors may require that you operate in a particular way. They may dictate hours; pre-approve signs, employee uniforms and advertisements; or demand that you use certain accounting or bookkeeping procedures. In some cases, a franchise advertising cooperative may require you to sell some goods or services at specific discounted prices, which may affect your profits.

Or, the franchisor may require that you buy supplies only from an approved supplier, even if you can buy similar goods elsewhere for less. Restrictions on Sales Area A franchisor may limit your business to a specific location or sales territory. For example, the franchisor may have the right to offer the same goods or services in your sales area through its own website, catalogs, other retailers or competing outlets of a different company-owned franchise.

Contractual Obligations Franchise contracts last only for the number of years stated in the contract. Terminations A franchisor can end your franchise agreement for a variety of reasons, including your failure to pay royalties or abide by performance standards and sales restrictions. Renewals Franchise agreements may run for as long as 20 years. Renewals are not automatic. For example, the franchisor may raise the royalty payments, impose new design standards and sales restrictions, or reduce your territory.

Any of these changes may result in higher costs, reduced profits or more competition from company-owned outlets or other franchisees. Is a Franchise Right for You? Before you invest in a particular franchise system, think about how much money you have to invest, your abilities and your goals. Your Investment How much money do you have to invest?

How much money can you afford to lose? Are you purchasing the franchise alone or with partners? Do you need financing? Where will you get it? Do you have savings or additional income to live on until your franchise opens and, you hope, becomes profitable? Your Abilities Does the franchise require technical experience or special training or education — for example, auto repair, home and office decorating or tax preparation?

What special skills can you bring to this business? What experience do you have as a business owner or manager? Your Goals What are your reasons for buying a particular franchise?

franchisor and franchisee relationship pdf reader

Do you need a specific minimum annual income? Do you want to work in a particular field? Are you interested in retail sales or performing a service? How many hours can you work? How many are you willing to work? Do you intend to operate the business yourself or hire a manager? Will franchise ownership be your main source of income or a supplement to your current income? Are you in this for the long term? Would you like to own several outlets? Are you willing to let the franchisor be your boss?

Franchise Exposition Attending a franchise exposition allows you to see and compare a variety of franchise possibilities at one time. Before you attend, research the kind of franchise that may best suit your budget, experience and goals.

When you attend, visit several franchise exhibitors who deal with the type of industry that appeals to you. How many franchised outlets are there?

What is the initial franchise fee? What are the additional start-up costs? Are there continuing royalty payments? How much are they? What management, technical and other support does the franchisor offer?

franchisor and franchisee relationship pdf reader

What controls does the franchisor impose? How long has the franchisor been in business? Exhibitors may offer you incentives to attend a promotional meeting to discuss the franchise in detail. These meetings can be another source of information and give you a chance to raise questions, but they may also expose you to high-pressure sales tactics.

Be prepared to walk away from any franchise opportunity — and promotion — that does not fit your needs. Typically, a broker reviews the amount of money you have to invest and then directs you to opportunities that match your interests and resources.

A broker also may help you finish applications and the paperwork to complete the sale. Brokers often work for franchisors, and are paid only if a sale is made.

What choices does the broker offer? That may be true — or not. Ask how many franchisors the broker represents. A broker who represents only a few franchisors will give you limited suggestions. How does the broker select franchises? Some franchise brokers may claim they will suggest only those franchises that meet certain standards. You may think this means that your risk is limited because the broker weeds out poor investments. In fact, some brokers represent any franchisor willing to pay them a commission for a sale.

Ask how the broker selects franchisors to represent. Ask to see the selection criteria and how many franchisors the broker has recently turned down. How is the broker paid? Some brokers earn a flat fee regardless of the price of the franchise they sell. Others earn a commission based on the cost of the franchise. These brokers may steer you toward a more costly franchise to increase their commission.

franchisor and franchisee relationship pdf reader

Ask who pays the broker and how the payment is calculated. Find out whether the broker earns a commission based on the cost of the franchise.

If he or she does, consider whether the broker is suggesting a higher priced franchise in order to earn a larger commission. To convince you to buy a particular franchise, a broker may talk about how much money you can make. These claims may not be true or can be misleading.