One way to start a business is to buy into a franchise. When you buy a franchise, the risk is minimized since a well-established franchise has a proven business method with established products or services. You are not starting from scratch.
The Federal Trade Commission’s Bureau of Consumer Protection offers a comprehensive guide of buying into a franchise . They suggest asking the following questions:
- What is the name and brand recognition for the company and its product or service
- How long has the franchisor been in business?
- how long the franchisor has managed a franchise system
- How many franchised outlets exist? Where are they?
- What is the initial franchise fee?
- What additional start-up costs can you expect?
- Are there continuing royalty payments? How much? What do other franchisees pay?
- What management, technical, and other support does the franchisor offer?
- What controls does the franchisor impose?