Buying a franchise is a way to reduce risk and receive support from a large network - you know what you're getting. The preliminary work has been done with well-established infrastructure, a product line in place, and a well-debeloped marketing strategy. The customer base may be set, sometimes with good name recognition. The franchisor usually provides management assistance and training and may offer financial support. The pooled resource of many franchisees allow strong promotional opportunities and group buying power.

Disadvantages:

A franchise offers less freedom than an independent business. There are many rules and procedures in place. The owner cannot change products and services. Initial franchise fees may be expensive. You need to take into consideration start-up and operational costs as well as ongoing royalty and other payments to the franchisor. The reputation of one franchisee is affected by that of others. Transfer of ownership may require approval of the franchisor.

A franchise is one way to avoid many of the risks and headaches associated with starting a new business. When you buy a franchise, you are buying the right to use the franchisor's name, product, and management approach. A franchise already has its infrastructure in place as well as a promotional strategy. Name recognition may be well-established and you have a good idea of what you are getting.

Before you buy a franchise, proceed cautiously and do your homework. You might want to take a test to see if you will make a good franchise owner. Make sure the company you are considering fits your personal interests and needs. Ask a lot of questions. Visit a franchise unit and spend some time there. Talk to the owner and customers. Imagine working there for years.

When you find a franchise you like, contact the franchisor to request information. Generally, you will be asked to provide some basic information, including personal financial data. If this initial paperwork is satisfactory, you will be invited to visit the home office where you will usually receive a tour, sales presentation, and information about the company. This information should help in your decision to negotiate a franchise purchase.

Study all the documents carefully. It is good to have professional help in analyzing the financial statements, litigation history, and other background information. Examine the franchise agreement carefully with your lawyer. Talk to as many franchisees and visit as many units as possible. Proceed with the deal only when you are fully satisfied that it is the business for you.

For more information please see at  The San Joaquin Delta College Small Business Small Development Center