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Buying a Franchise Archives

After Buying a Franchise, Two More Families Facing Bankruptcy

Another day and two more prospective clients calling for help because they bought franchises. One in the senior health care industry; one in the men's hair care industry. Both suffered devastating losses. In under two years, one lost $600,000; the other "only" $100,000. In both cases, they have nothing left and I had to talk to them about consulting a bankruptcy attorney.

Buying a Franchise--What Are You Getting For Your Money?

Every day people eager to own a business invest $500,000 to a million dollars in franchises where the FDD said the top of the range for "estimated initial investment" wasunder $250,000-and where the "initial franchise fee" is only about $35,000. When buying a franchise, the first question they should be asking is what are they getting for all that money?

Buying a Franchise - Beware of Empty Promises

If you are considering buying a franchise, you need to beware of empty promises from the franchisor. Over the last few years, franchise agreements have become extremely one-sided. Recently, many franchisors are making no enforceable promises to provide franchisees with any support or assistance after their business opens.

When Buying a Franchise, Think Before You Convert

When buying a franchise, think before you convert your existing business to a franchise.  If you have an existing business, you may discover opportunities to convert your business to a franchise--to get the benefits of a "well known brand", to gain "purchasing power", or to gain advertising and support.  You may even be tempted because of the attractiveness of the package.

Buying a Franchise--Lies, Damned Lies and Statistics

In buying a franchise, beware of the lies, damned lies and statistics--about 90% success rates, among other things.  At some point in the process of buying a franchise, someone will probably tell you that 90% of all franchises succeed. That person is lying. Years ago, the Department of Commerce produced a "study" with that statistic and unscrupulous franchisors and franchise brokers have been relying on it ever since.

Buying a Franchise - "I should never have bought it"

At least weekly we hear from a franchisee, after buying a franchise, that "I should never have bought it." That realization stings. It signals that the honeymoon has ended and the spell cast by the sales consultant has worn off. Frequently, it signals the impending economic death of the franchisee-and the ultimate "death by a thousand cuts" of the franchisor.

Buying a Franchise - Don't Sign Agreeing to Lies

Almost every franchisee, when buying a franchise, is asked to sign a document containing false statements--in order to be "awarded" a franchise.  No franchise or other business opportunity is worth signing something false to get it. 

Buying a Franchise - College Students Should Beware

With jobs scarce for college students and new graduates, college students should beware of an increasingly active predator-the franchise sales person. They haunt job fairs and campuses with tantalizing "opportunities" to start your own business by buying a franchise; opportunities to be free of the lines for every job opening. What they are offering, unfortunately, is indentured servitude that can be hard to escape.

Buying a Franchise--Duty to disclose high failure rates?

Franchise site BlueMauMau (25 Worst) just released a list of the 25 worst franchise investments-without even asking the question of whether such extraordinarily bad results give rise to a duty to disclose high failure rates to those who are buying a franchise.

Buying a Franchise - Watch the Statute of Limitations

Every franchisee, at the beginning, goes through a "honeymoon" period that can last a few years. That phase can have a very dangerous side-effect of causing you to be unable to successfully make a claim if the franchisor did something wrong. It is very important when buying a franchise that you watch the statute of limitations.

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