I was told my great-grandfather was a shrewd businessman. He was self-employed and worked hard until the day he died. Then again, if he would have purchased the correct franchise he wouldn’t have needed to work hard until the day he died.
When a gentleman asked him to buy some McDonald’s franchises for $4,000 each, he turned him down. Instead he decided his neighborhood needed more Pizza Kings. I’m not knocking Pizza King (I had never heard of it until my dad told me this story,) but all I am saying is today McDonald’s has 58 million likes on Facebook and Pizza King has 37,000.
Either way because my great-grandfather didn’t leave me millions, I have to work hard to make a living. I do not complain because if I was a multi-millionaire I’d probably weigh 1000 pounds from lying around on piles of money all day eating free Big Mac sandwiches. But the thought often crosses my mind to follow in my great-grandfather’s entrepreneurial footsteps, hoping of course that in many years the franchise I choose will have millions of likes on Facebook, and not thousands.
For me, the appeal of purchasing a franchise is that unlike a new startup, the business plan/formula is already in place for you. With built-in franchise support and pre-existing name recognition that supplies you with loyal customers before you even lift a finger, purchasing a franchise can be a great option for someone who believes they will be successful as a business owner but doesn’t want to take the risks involved with a new startup. There is still hard work to be done, but it is nice to be in control (without taking on unnecessary risks.)
My friend and I were recently considering the purchase of a particular franchise that we believe would do very well in our area. Currently I have to drive way too far to obtain this particular food, and they don’t deliver to my neighborhood.
My wife says we shouldn’t purchase a franchise so that I can get my favorite food delivered to me. While she thinks that would be lazy, I think our willingness to pay tens of thousands of dollars for delivery of this food is proof that the business would be successful. I am concerned, however, that my friend and I would potentially eat all of our profits (like literally eat so much food we wouldn’t profit) which I imagine isn’t a good business practice.
No matter what franchise you end up with, the chance of success grows exponentially when you have a great attorney representing you throughout the process. The ability to work through a franchise contract, with its hundreds of pages of legalese, is just one example where a great attorney can put you in a better position with those selling the franchise.
I picture my attorney, Elliott Stapleton, sitting at a table across from the “corporate types” working out a great deal for me as I lean back in my chair and eat my favorite food (that I now own.) I’m sure my great-grandfather would be proud.
When you purchase a franchise, you are buying into a company's systems, products, marketing, and name. It is important when making this evaluation to accept the limitation of freedom in exchange for what is, hopefully, a successful model.
While it is essential to have an attorney review your franchise agreement, there are questions that you can ask to determine is this business "right" for you. Here is an article covering the five questions that every potential franchisee should ask before hiring an attorney to review the franchise agreement.
Elliott Stapleton Attorney with CMRS Law