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When considering investing in a franchise business, it’s critical to research your potential investment thoroughly. Most times, prospective buyers are not equipped to be able to fully comprehend and digest the materials that are presented to them. Many people understand the importance of seeking guidance, but aren’t sure who to consult with or who to trust.
When it comes to looking over the financial information that is provided to the prospective buyer in the Uniform Franchise Offering Circular (UFOC) document, it’s recommended to seek out the assistance of an accountant in order to make sense of the jargon used to explain the financial standing of the company. This information includes any possible past history of bankruptcy on behalf of the company’s owners as well as the current financial standing in the company. This is critical information to not only read, but to fully comprehend before investing such a substantial amount of money into a business opportunity.
When it comes to any sort of contract, consult with an attorney in order to make sure that you fully understand the implications of the contract. When it comes to registering your business, a lawyer can also help advise you on what type of business to declare (i.e., corporation, limited liability company, partnership, sole proprietorship) as well as guide you in the right direction with regards to these proceedings.
Along the way, you are sure to meet people who advertise themselves as Franchise Business Consultants/Coaches. While these people can offer a wealth of information, understand that they are usually being paid a commission by the franchisor and therefore might not offer completely balanced information all of the time. However, the franchisor does want to see you succeed and they are looking for people with potential to make them money, so there is a certain element of give-and-take that is in favor of the buyer. Just be cautious when consulting with those paid on commission.
For prospective buyers investing in a franchise business, the investigation process is one of the most critical periods. This is the time to invest in top-notch legal and financial counsel while not trying to cut corners. Make sure to take your time choosing the right people and ask around for recommendations for those specializing in small businesses.Buy a franchise only after speaking to others in the franchise business. It will give a real good snapshot of how franchises work and what they can offer.