What To Take Into Account When Buying A Franchise
Written on the 24 March 2008 by Elisabeth Ritchie - HWL Lawyers
The purchase of a franchise business is different from the purchase of an independent business. As a franchisee you will be party to a long-term relationship with your franchisor and you will agree to run the business in accordance with the franchisor’s system.
It also involves the payment of fees and/or percentages of turnover to the franchisor, a reduction of independence through franchisor control of management, and there may be factors that adversely affect a franchisee that are outside its control, e.g. reputation risk.
Make sure you obtain relevant information
The following are important factors you must give consideration to.
The warning signs of a 'dodgy' franchise
If the franchise business you are interested in displays any of these signs, it would be wise to end your negotiations with them - chances are they aren't reputable and are just trying to rip you off:
When evaluating your franchise business opportunity you should carefully assess all aspects and obtain advice from experienced professionals such as solicitors, accountants, financial and business advisers and franchising consultants. You will need to consider whether you will enter into the business as an individual or through some form of business structure. You will need to consider the tax implications of entering into a franchise business.
Prepared by Elisabeth Ritchie, Partner, Home Wilkinson Lowry
Elisabeth Ritchie is the head of the firm's Franchising and Licensing Cell. The firm provides specialist advice to both franchisors and franchisees. Elisabeth regularly advises in relation to the set up and purchase of franchises, as well as presenting franchise workshops and seminars.
Author:Elisabeth Ritchie - HWL Lawyers
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